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How to Make the Most of Energy Pricing Benefits by Understanding Tariff rates
Opening the mailbox and finding their electricity bills have become a painful experience for all Australians. Energy prices have soared in Australia in the past decade, and everyone is feeling the pinch. As per recent data, the electricity prices were under control till 2008, but by the arrival of 2018, the electricity prices had risen by 117%, which is four times the average price rise in all sectors.
Australia’s Open Grid Model for National Electricity Market
Luckily, the Australian energy market follows an open grid model where the energy retailers purchase electricity from energy generators and sell it to households and businesses. Victorian consumers have the freedom to select their energy retailers. If you feel your current energy plan is the reason behind high energy bills, you can visit websites that compare energy VIC to learn about cheaper energy plans offered by different energy retailers in Victoria.
Victoria has a total land area of 87,817 sq. miles. As per the latest data, the state has a vast electricity distribution network with a total length of 200,000 km. It has five distribution areas. Three distribution areas cover Melbourne and inner suburbs, while two distribution areas cover regional victoria and other suburban areas.
If you want to take advantage of varied energy pricing in Victoria, it is important for you to understand different tariff rates in your electricity bill.
Tariff Rates Explained
The Fixed Charge
It is not related to the energy units you use. The fixed charge is often referred to as supply charge or “service to property” charge”. It is displayed in your electricity bill ascents per day. The fixed rate varies with energy retailers. The fixed rate in Victoria is in the range of $1.02 to $1.26 for residential customers. Since the fixed rate is calculated per day, even an incremental decrease can reduce your energy bills significantly. When you compare energy in VIC through websites, check the fixed rate levied by all energy retailers.
The Variable Charge
It is related to the energy units you use. The variable charge is listed as Cents per kWh in your energy bill. Electricity retailers offer different variable charges to consumers, which are referred to as Blocks. You will pay a lower variable charge for Block 1 each quarter and a higher variable charge for Block 2.
Energy retailers define the limits of Blocks, and the variable charges are applied accordingly. Here is one example, how the variable charge and energy Blocks work in tandem.
Suppose the Block 1 limit is defined up to 1020kWh and the variable rate for Block 1 is $0.31 per kWh, and the variable rate for Block 2 is $0.34. If your quarterly consumption is 2000 kWh, then your variable charges for the quarter will be as follows
- Block 1 – 1020 kWh x $0.31 = $316.2
- Block 2 – 980 kWh x $0.34 = =$333.2
- Total variable charges = $649.4
Solar Feed-in Tariffs
Australia encourages consumers to install small-scale renewable energy systems to reduce the electricity dependence generated by burning fossil fuels. If you have a solar PV system installed on your rooftop, you can export surplus electricity generated to the main power grid. The energy retailer will pay for the electricity injected into the power grid in solar feed-in tariffs.
The solar feed-in tariffs vary with energy retailers. If your energy requirements are low and the solar PV system generates surplus energy, you can earn good energy credits for exporting electricity to the main grid.
To sum up, these are some important tariffs you need to look for when comparing energy plans in Victoria.
