No need to remind you that electricity prices are rising at alarming rates. Households and businesses budgets are bombarded with power bills. But why are electricity prices that expensive in Australia? What causes the changes in electricity bills?

There is no single factor causing the increase. Electricity bills are made of 4 main components and each of them contributes to the current situation:

• The wholesale electricity prices (electricity generation)
• The network costs (Poles and wires for distribution and transmission)
• The retail charges (Electricity company costs for servicing and billing to customers)
• The government policies and environment costs

These 4 factors have a different impact on the rising prices in each state, but the story is similar from one to another:

• The wholesale prices

The cost of generating electricity is known as wholesale prices. Wholesale prices follow the law of offer and demand.  Over the last past years, several old power plants closed down and not enough new power generation replaced them. With less electricity generated, the wholesale prices inevitably increased.

• The network costs

Australia is a large country and has the longest network in the world, maintaining this network has a cost. A large amount is attributable to the network component. Over the last past years, a large amount had to be invested in infrastructures and renovation. A total of $45 billion were spent on network upgrades between2009 and 2014.

Increased peak demand due to population growth, have also contributed to the network cost increases.

• The retail charges

The second component of your electricity bill is the amount you pay for the service provided by your electricity retailer but also the money they spend on marketing to recruit and retain customers. According to the Grattan Institute, Victorians pay an average of $400 per year to the retailers and this amount has increased by 26% over the last few years.

• The government policies costs

This includes the costs of environmental programs with for example the households and businesses incentives.

How can you combat rising electricity prices?

The only thing you can do to combat rising electricity prices is to reduce your energy demand from the grid. This could mean turning off appliances when not in use for example or avoid the peak demand times.

Try to compare retailer prices and look for the best deal.

But most of all, the most efficient way to reduce your electricity bills is, without doubt, installing solar panels and generate your own electricity. Read more about solar benefits here.

If you are considering a solar power system to reduce your energy bills, call Energis on 1300 782 217 or contact us via email at sales@energis.com.au.