Energy pricing

Residential and small business customer energy pricing

How electricity is priced

If you want to learn more about how electricity is priced or the recent pricing changes - let us break it down for you.

The costs explained

There are many factors that affect the cost of getting electricity to you. Our business activities include buying wholesale electricity and arranging network services to deliver that electricity to you. In addition, we arrange connections, metering and billing.

Wholesale market costs

The wholesale market cost is the amount we pay to buy enough electricity to supply to our customers. Electricity can be bought directly from the wholesale electricity market where generator companies sell their output. It’s all done electronically, and prices fluctuate depending on availability and demand.

Network costs

Network costs are the costs that a distributor incurs to send electricity to homes via poles and wires. We will pay distributors for the cost of delivering this electricity to you.

Government and regulatory costs

There are also a number of federal and state government schemes that can add costs. This may include renewable energy targets and energy efficiency schemes.

Retailer costs

We also have direct and indirect costs in arranging the supply of wholesale electricity and network services, complying with regulation and providing customer service. This cost is calculated into our electricity rates.

Victorian customers only

From 1 July 2019, the Victorian Essential Services Commission set standardised ‘default prices’ for some electricity standing offers. This is known as the Victorian Default Offer, or VDO.

The Victorian State Government introduced the VDO to make energy prices more affordable for Victorians. This default price was first applied from 1 July 2019.

The price of your electricity will now depend on your usage, the distribution zone you live in and the tariff you’re currently paying.

All electricity retailers, including Powerdirect, must make the default prices available as a ‘standing offer’ to home and small business customers. You wouldn’t be on a standing offer if you’ve instead signed up to a specific energy plan, called a ‘market contract’.

We’re committed to making energy fairer for our customers. We’re here to help you understand the new default price and how it compares with your current plan and other market rates.

Please contact us if you have any questions.

New South Wales, Queensland and South Australian customers only

From 1 July 2019, the Australian Energy Regulator set price caps for electricity customers on some standing offers in New South Wales, South Australia and south-east Queensland. This is known as the Default Market Offer, or DMO.

The Federal Government introduced the DMO to make energy prices more affordable for customers. The initial default price applies from 1 July 2019 to 30 June 2020. From 1 July 2020, a new default price will be introduced.

The default price represents a benchmark, or reference price, for what electricity retailers can charge a range of customers in an electricity distribution zone.

The default price also limits the annual cost of standing offers set by retailers. You wouldn’t be on a standing offer if you’ve instead signed up to a specific energy plan, called a ‘market contract’. The maximum amount that you can be charged if you’re on a standing offer will depend on a range of factors, including usage, distribution area and tariff type.

For customers who are covered by the new rules, retailers are also required to say how electricity prices that they advertise, publish or offer (e.g. energy plan prices) compare to the default price cap.

They must also estimate the annual cost of the offer, based on certain usage assumptions, and explain a range of other matters depending on the nature of the electricity offer or advertisement.

We're committed to making energy fairer for our customers. We’re here to help you understand the new default price and how it compares with your current plan and other market rates.

Please contact us if you have any questions.

There are two types of energy charges that appear on most customers’ energy bills:

Daily supply charges (service or supply charges)

A daily supply charge is a charge that applies for supplying electricity to your property for each day of the billing period. Daily supply charges are not related to the amount of energy used during the billing period.

Daily supply charges cover some of the costs of maintaining and operating the distribution and transmission networks, and some of the operational costs of servicing our customers.

Usage charges

Usage charges are calculated per kilowatt hour (kWh), for electricity, for the amount of electricity used at a home or business during the time period covered by a bill. Usage charges also cover some of the costs of maintaining and operating the distribution and transmission networks, and some of the operational costs of supplying our customers.

The majority of costs associated with government green schemes are generally recovered through the usage charges.

The actual amount of the usage charges that appear on an individual customer’s bill depends on how much energy they use, as measured by their meter and multiplied by the usage rates that apply under their energy contract.

It's possible that two similarly sized houses right next to each other, that are billed for the same time period and pay the same energy rates under identical energy plans, might have very different amounts on their energy bills.

This can be due to a number of physical factors about the property, the number of occupants or the way the occupants use energy.

For example, one home may have double glazed windows, or more insulation and weather proofing, making it more energy efficient. One house may have a solar power system that generates electricity.

One home may use energy efficient lighting, and the other may have a large number of inefficient down lights installed. A heated and filtered backyard pool can add significant cost to a household electricity bill.

One home may have more energy-hungry appliances, such as plasma screen televisions, or mobile devices that require recharging every day. A second fridge can also add considerable cost to a household electricity bill.

The household occupants may use their appliances at different times of the day, which matters if different rates apply to usage that occurs during peak, off-peak or shoulder times of the day.

One home may have more efficient heating, or cooling, or the heating or cooling might be set to different temperatures. One occupant might do more loads of washing. One occupant may line dry their clothes, while the other uses a tumble dryer.

All of these factors will combine uniquely for every household, which may result in quite different amounts when the energy bill arrives.

Your meter type and configuration determines the electricity rates available to you.

Traditional electricity meters don't record when you use electricity, they only record how much you have used in total since the last time the meter was read. If you have a pool pump, slab heating or storage hot water, then traditionally you might have a separate controlled load meter through which these facilities operate during off-peak times, with off-peak rates applying to their usage.

However, new smart meters record when electricity is used in half hourly intervals, and this is reported back to energy retailers on a daily basis. Because of this, smart meters also support a flexible pricing structure, in which different electricity rates can apply at different times of the day.

With a flexible pricing structure, higher amounts might apply during peak hours, with lower rates applying during off-peak and shoulder times of the day. A smart meter and flexible pricing structure may enable you to lower your overall electricity usage costs by shifting some of your electricity usage outside the peak times.

For example, running energy-hungry appliances such as a dishwasher or clothes dryer during the off-peak period will help you take advantage of lower off-peak rates.

Installing a solar power system can result in a significant reduction of overall bill amounts.

A solar power system harnesses energy from sunlight via solar panels on the roof and converts it into electricity. Generating electricity in this way is considered environmentally friendly as it produces no direct greenhouse gas emissions.

With a net metered solar power system, the electricity that is generated is used by the home or business, and any excess electricity (where the solar power system is generating more than is being used in the home or business at any point in time) is fed back into the electricity grid.

With a gross metered solar power system, all the electricity that is generated is fed back into the electricity grid.

Customers with either a net or gross metered solar power system are paid for the excess electricity that is fed back into the grid in the form of solar feed-in credit on their electricity bills.

So a net metered solar power system reduces the amount of electricity that homes and businesses need to buy for use during the day. Plus, the feed-in credits for solar electricity not used by the home or business and fed into the grid helps off-set the cost of electricity that is purchased from the grid.

With a gross metered solar power system all the solar electricity generated is fed into the grid, for which the home or business will receive feed-in credits, but all the electricity used by the home or business is drawn from the grid and paid for under the customer’s energy plan.

Solar feed-in tariffs, which are used to calculate solar feed-in bill credits, differ from state to state and may depend on when a solar feed-in agreement was entered into and the type of metering that is set up.

The amount of any solar feed-in credits received will depend on geographical location, the size of the solar power system installed and, in the case of net metered systems, the energy usage of the home or business at the time the solar power system is generating electricity.

Installing a solar power system can reduce the size of electricity bills, and can significantly do so depending on size of the particular system installed.