How much you pay for electricity or gas each quarter depends on how much energy you consumed and the tariff you are charged. The retail tariff you are charged will depend on the type of contract or offer you have with your retailer.
Standing offer
All retailers must offer you a standard contract no higher than the default market offer (DMO) price. The DMO is set by the Australian Energy Regulator each year.
If you don't choose a market contract you will be supplied a standing offer contract with the retailer who has the billing rights for the site. If there is an existing connection at the site, you can be supplied by the retailer who currently supplies the site, or your preferred retailer. In either case we recommend you contact the retailer to discuss the price, as the default market offer rate may be higher than market contract rates.
The DMO price also acts as a ‘reference price’. When promoting market offer pricing, retailers must show the price of their offer in comparison to the DMO, to help customers compare.
Market offer
When you take up a special offer or deal, you enter into a market contract with the retailer. These contracts vary between retailers and contain various terms and conditions around considerations such as the duration of the contract, discounts and any fees.
The retailer sets the price and usually reserves the right to change it at any time. All market contracts have a ten day cooling off period. Within this period, you can cancel the contract by phone or in writing without penalty.
Large market contracts for businesses
Small business customers typically consume more energy than a standard domestic customer. If they consume more than 100,000 kWh electricity per year or 1 terrajoule of gas per year they are required to enter into a ‘large market’ contract. Large market contracts do not have the consumer protections available to customers who use less energy. It is therefore important to fully understand the terms and conditions of the contract.
Energy charges on your bills
The tariff you see on your electricity or gas bill reflects the retailer’s costs of supplying the electricity or gas to you, which includes:
- the costs of purchasing wholesale electricity or gas
- the cost of transporting it through the transmission and distribution networks (network charges are set separately by the Australian Energy Regulator)
- the retail operating costs such as billing and operating call centres.
Retail tariffs include fixed and variable charges:
- The variable component is applied to the amount of electricity or gas you use. Electricity is expressed in cents per kilowatt hour (kWh) and gas in cents per megajoule (MJ). This will vary each quarter, depending on your usage.
- The supply charge is expressed in cents per day. This represents the fixed charges the retailer and network incur, (for example meter readings, maintaining the poles and wires/pipes, vegetation management, maintaining a call centre) regardless of how much energy the customer uses. Every customer pays this supply charge, even if they have consumed little or no energy.
Comparing energy offers
Visit Energy Made Easy to compare offers from electricity and gas retailers. It's free, independent and shows you all providers, unlike some commercial comparison sites.
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