Average electricity costs in Australia

If you’ve looked at your electricity bills lately, you’ll know that you have to pay a daily access fee as well as pay for the energy you use. Usage costs are not the only factor to focus on, and that’s what we’re going to break down for you in this article.

The cost of using electricity is typically known as a 'usage charge,' which is measured in kilowatt-hours (kWh). Most electricity providers across Australia charge between 25 and 45 cents per kWh, but these rates can vary based on the state you’re in. Electricity prices are determined by several factors, such as:

• Your location and the energy distributor for your area
• The type of tariff you're subscribed to, like single rate or time of use
• Your total electricity consumption

Understanding usage charges is crucial as they can make up a significant portion of your electricity bill. It's important to review your energy price fact sheet to ensure you're getting the best price per kWh. But what is a good price? And what is the average electricity cost in Australia? Let's explore below.

What’s the average price per kWh in Australia?

Electricity usage rates can differ significantly between states and even within regions of the same state. This variation is influenced by factors such as distribution networks and available plans.

The AEMC Residential Electricity Price Trends report shows the average price per kilowatt-hour (kWh) for single-rate tariffs across various distribution networks. 

Electricity prices can vary significantly between states and regions within the same state. South Australians pay the highest average per kilowatt-hour (kWh) rates, while those in Southeast Queensland typically enjoy the lowest prices per kWh.

It's important to note that the price per kWh is just one part of your electricity bill. Fixed or supply charges, which apply regardless of your energy usage, also contribute significantly to your bill. Additionally, discounts can play a significant role.

While some discounts might hide high rates, many energy deals offer genuine value with substantial discounts. Therefore, finding the best electricity deal involves considering these factors, which can be complex.

Why do some states pay more?

Residents in South Australia might be annoyed to find that they are paying significantly more for electricity compared to those in South-East Queensland, where the average rate is 14.68c/kWh lower.

However, the SA government provides concessions to help mitigate the impact of high electricity costs.

Several factors influence the variation in electricity prices before consumers even receive their energy bills:

• Generation: Renewable energy sources like wind and solar are generally cheaper to operate, but they often cannot meet the total energy demand. Consequently, many states supplement these sources with more expensive coal and gas plants. South Australia relies heavily on wind power, followed by gas, which is more expensive than coal.
• Network: Distributors are responsible for maintaining the infrastructure, such as poles and wires, to ensure a reliable electricity supply. These network charges can constitute a significant portion of the total energy bill.
• Retail mark-ups: Energy retailers add their mark-ups to energy plans to cover costs and generate profits, within regulated limits.

Factors that affect your bill

Your electricity bill is affected by more than just your usage. Here are some additional factors:

• Supply charges: These are daily fees for being connected to the electricity grid, regardless of how much electricity you use.
• Tariff type: The type of tariff you're on affects your costs. For example, with a single rate tariff, your kWh usage costs are the same regardless of the time of day. However, on a time of use tariff, you'll pay different rates for peak, off-peak, and shoulder periods.
• Bill credits: Energy providers may offer sign-up deals that include bill credits. These credits can be applied to your first or second bill or spread out over a period of time.

Who decides how much we pay for electricity?

Electricity rates are set by energy companies like AGL and Origin in most states, as usage charges are deregulated. These rates are not arbitrary; they are largely based on the wholesale price of electricity.

This wholesale price is what electricity providers pay generators for power, which is then sold to consumers. Since wholesale prices change every 30 minutes, retailers must predict these changes when setting their prices.

Electricity usage rates typically undergo changes once a year for most customers, but this can vary depending on the type of contract you have.

Customers on a standard contract are legally protected from more than one rate increase per year. Meanwhile, those on a market offer may see changes at any time, as long as they receive advance written notice.

However, in practice, most retailers adjust their rates annually, often around July.

Average electricity cost per kWh by retailer

To determine the average electricity cost per kWh for all of Compare Energy’s retailers, we examined their most affordable single rate plans in every state where they are available.

Our calculations encompassed both the supply charge and the usage rate for each provider in the states in which they operate.

Australia-wide averages by retailer

SEQ averages by retailer

NSW averages by retailer

SA averages by retailer

VIC averages by retailer

ACT averages by retailer

How do I find the best electricity rates?

You're well on your way to discovering a fantastic electricity deal just by visiting our website. While it's tempting to focus solely on big discounts or low usage rates when comparing electricity products, it's crucial to consider a variety of factors.

When seeking a new deal, you should weigh rates, discounts, perks, and any additional contract terms. It's also beneficial to choose an energy company that puts customer satisfaction first.

Contacting Compare Energy today can help you to get connected to the best possible plan for your location and budget.