Understanding Your Electricity Bill

You open your quarterly electricity bill. $847. That's $220 more than last quarter, but you haven't changed anything.

The charges listed—supply, usage, network, environmental—blur together into a wall of numbers and abbreviations.

What are you actually paying for?

If you've ever stared at your bill thinking "Why are there twelve different charges for one service?"—you're not alone. According to Energy Consumers Australia's 2024 survey, 68% of Australian households don't understand their electricity bill structure. That confusion costs real money. The Australian Energy Regulator found that households who don't understand their tariff structure overpay by an average of $220 annually.

Your electricity bill contains eight to twelve separate charges, each with its own logic.

Some you control. Some you don't.

Let's decode every line, because understanding what you're paying for is the first step to paying less.

Wait—why am I paying two different types of charges?

Think of your electricity costs like a mobile phone plan: you pay a base fee just to have the service, then usage fees for what you actually consume. That's it. Two buckets. Everything else on your bill fits into one of these categories or sits on top as a regulated pass-through.

What's this daily charge for—even when I'm away?

This is your supply charge—sometimes called a service charge or daily charge. It's your connection fee. You pay it every single day, whether you use electricity or not.

In Victoria, typical supply charges range from 90 cents to $1.20 per day according to the Essential Services Commission's October 2025 standing offer rates. Let's do the maths: $1.05 per day × 365 days = $383 annually before you've turned on a single appliance. That's roughly a quarter of your total bill spent just to remain connected.

What does this actually cover? Four things:

1. maintaining the network infrastructure (the poles and wires that deliver electricity to your street),
2. reading and managing your meter,
3. keeping your connection to the grid active, and
4. your retailer's customer service costs.

Can I avoid this charge?

No. Even with solar panels generating all the electricity you need. Even if you're away for three months.

This charge applies every day you're connected to the grid. It's like paying rent for access to the electricity network.

The only way to avoid it completely is going off-grid—disconnecting from the network entirely. That means installing batteries large enough to power your entire home year-round, which currently costs $30,000-50,000 for most Victorian households according to Clean Energy Council pricing data. For the vast majority of people, that investment doesn't make financial sense. The supply charge, frustrating as it is, remains the most economical option.

Now here's better news. That supply charge might be fixed, but your usage charge isn't. This is where your decisions start to matter.

So this is the part I can actually control?

Yes. Your usage charge is the variable cost—the more you use, the more you pay. This is where your behaviour makes a real difference.

Usage is measured in kilowatt-hours, abbreviated as kWh. A kilowatt-hour is the energy needed to run a 1,000-watt appliance for one hour.

That's the technical definition. Here's what it means in practice:

• Your fridge uses roughly 1-2 kWh per day (based on YourHome.gov.au appliance calculator)
• A reverse-cycle air conditioner on heating uses 2-3 kWh per hour
• A dishwasher cycle uses about 2 kWh
• An LED light bulb uses about 0.01 kWh per hour (you'd need to run it for 100 hours to use 1 kWh)

Victorian households typically pay 18 to 35 cents per kWh depending on their tariff type and time of use, according to the Essential Services Commission's 2025 Victorian Energy Market Report. That's a huge range—nearly double at the top end compared to the bottom. Your tariff structure determines where you sit on that spectrum.

That range looks wide until you compare it across states. South Australians pay the highest electricity rates in Australia—averaging 34 cents per kWh and ranging up to 37 cents, according to recent market data. Queensland (particularly south-east Queensland) enjoys some of the lowest rates, averaging around 30 cents per kWh. New South Wales sits in the middle at roughly 32.5 cents per kWh average.

Victoria's average rates are among the lowest in the country, with the Victorian Default Offer set at $1,546 annually for typical usage, compared to South Australia's Default Market Offer of $2,301 annually—a $755 difference for similar consumption patterns. Geography matters, but even within Victoria, your tariff choice can shift your position from the bottom of that range to the top.

‍Makao note: These two charges—supply and usage—account for 70-80% of your bill according to the Australian Energy Regulator's 2024 Retail Energy Market Report. The remaining 20-30% comprises smaller network, environmental, and regulatory charges. We'll decode those shortly. But if you want to reduce your bill, these two buckets are where the action is.

Why does the time of day matter? Understanding tariff types

Here's where it gets interesting—and where most people discover they're on the wrong tariff for their lifestyle.

Your tariff structure determines not just how much you pay per kilowatt-hour, but whether that rate stays constant or varies throughout the day. This single choice can shift your annual bill by $200-400 in either direction. The right tariff for your neighbour might be wrong for you, even if your homes are identical, because tariffs reward specific usage patterns.

In Victoria, you'll encounter three main tariff types:

1. Single rate (flat rate)—one price all day, every day. Simple and predictable.
2. Time-of-use—different rates for peak, shoulder, and off-peak periods. Rewards flexibility.
3. Demand tariffs—charges based on your maximum power draw during peak periods. Less common for residential customers.

These tariff structures aren't unique to Victoria—NSW, Queensland, South Australia, and Tasmania all offer similar options. The specific rates and time periods vary by state and retailer, but the fundamental logic remains the same: single rate for simplicity, time-of-use for flexibility, demand for managing peak loads.

Let's decode each one, starting with the simplest.

Single rate, the straightforward option

Single rate tariffs—also called flat rate—charge one price per kilowatt-hour regardless of when you use electricity. In Victoria, a typical single rate sits around 28.5 cents per kWh based on 2025 market rates.

That rate applies at 3pm when you're running the air conditioner and half your street is doing the same. It applies at 3am when your house is dark and the grid is nearly empty. Same rate, all day, every day.

Who's this best for?

Single rate suits three types of households:

1. Small households with consistent usage—if you're using 8-12 kWh daily without large spikes, the simplicity often wins
2. People who value predictability—you know exactly what each kilowatt-hour costs, making budgeting straightforward
3. Renters or anyone who can't control appliance timing—if you can't install timers or shift loads to overnight, time-of-use advantages disappear

The trade-off is this: you pay the same rate during peak demand as during off-peak. You're essentially averaging out the grid's cost curve. That means you're subsidising people who've shifted their usage to cheap overnight periods, while missing out on those savings yourself.

Time-of-use, pay less by timing your usage strategically

So I can actually pay less by using power at different times?

Exactly. Time-of-use tariffs charge different rates for different times—typically peak, shoulder, and off-peak. Think of it like surge pricing for electricity, but in reverse: you save money during quiet times.

Victorian time-of-use structures typically look like this, based on Essential Services Commission data:

Peak: when does peak time actually happen?

Peak runs 3pm to 9pm on weekdays. The rate sits around 45 cents per kWh. This is when everyone gets home from work—cooking dinner, running the heating or cooling, watching television, charging devices. The grid is under maximum strain. According to AEMO's 2024 demand data, peak period demand can run 40-60% higher than overnight demand. That strain translates directly into price.

Shoulder: what about the rest of the day?

Shoulder periods cover 7am to 3pm and 9pm to 10pm on weekdays, plus 7am to 10pm on weekends. Rates sit around 25 cents per kWh. The grid isn't empty, but it's not stressed either. Moderate demand, moderate price.

Off-peak: this is the cheap stuff?

Off-peak runs 10pm to 7am every day. Rates drop to roughly 18 cents per kWh. When most households are asleep, demand plummets. Power stations still run, but the grid has abundant capacity. This is when electricity is genuinely cheap.

What do these rates actually mean for my bill?

Let's work through a real example. A dishwasher cycle uses about 2 kWh. Run it at 6pm during peak and it costs 90 cents. Set the delay timer to start at 11pm and the same load costs 36 cents. That's 60% savings just by pressing a button.

A family of four running the washing machine, dryer, and dishwasher off-peak instead of peak saves roughly $180-240 annually, based on three cycles per week per appliance (Sustainability Victoria calculator). That's not theoretical. That's measurable.

But what if I'm home during peak times?

This is the critical question that determines whether time-of-use works for you. If you work from home, or everyone's back by 4pm with the heating running, time-of-use might cost you more than single rate. The tariff structure doesn't save money by itself—your behaviour does.

Smart timers offer a middle path. They cost $15-30 each and automate appliances to run overnight even when you're asleep. Install them on your hot water system (if you control the switch), dishwasher, and washing machine, and suddenly you're capturing off-peak rates without changing your daily routine.

Who suits time-of-use?

This tariff rewards specific households:

• Flexible schedules—if you can delay laundry, dishes, or other high-draw activities until after 10pm
• Solar owners—you generate during the day (offsetting shoulder usage) and want cheap evening power
• People willing to change habits—or automate changes via timers

If none of these apply, single rate might actually be cheaper despite its higher average rate.

What's this demand charge on my bill?

Some bills show a "demand charge" listed in dollars per kilowatt, not dollars per kilowatt-hour. If you see this, you're on a demand tariff—less common for residential customers but worth understanding.

Instead of charging for total energy used, demand tariffs charge partly based on your maximum power draw during peak periods. It's not just about how much you use, but whether you use it all at once.

Picture this: you come home on a cold winter evening. You switch on the ducted heating (drawing 3 kW), start cooking on an electric oven (another 3 kW), and the hot water system kicks in (4 kW). For that half-hour, your home is drawing 10 kW from the grid. Even if you only do this once all month, that 10 kW becomes your demand charge basis—typically $8-15 per kilowatt per month.

Why does this exist?

The grid has to be built to handle everyone's maximum demand simultaneously. Demand tariffs incentivise spreading out high-draw appliances rather than running them together. According to the Australian Energy Regulator, this helps reduce the need for expensive grid infrastructure that only gets used during a few peak hours annually.

For most Victorian residential customers, demand tariffs aren't relevant yet. They're more common for larger homes or commercial sites. But if your bill shows a kilowatt-based charge, understanding this structure matters—because one careless evening of running everything simultaneously can materially impact your monthly bill.

What are all these other charges for?

Right. You understand supply charges and usage charges—the two big buckets that account for most of your bill.

But your bill has six more line items with names like "network charge," "environmental scheme," and "metering services."

Let's unpack them.

Who's this 'distributor' and why am I paying them?

Network charges—sometimes called distribution charges—cover the cost of physically delivering electricity to your home. Not the electricity itself, but the infrastructure that moves it: poles, wires, transformers, and substations between the power station and your meter.

Your distributor maintains this infrastructure. In Victoria, that's one of five companies depending on where you live: AusNet Services, Jemena, CitiPower, Powercor, or United Energy. You'll see their name on your bill. You don't choose your distributor—it's determined by your address according to the Essential Services Commission network area map.

How much is this costing me?

Usually this cost is embedded in your 90 cents to $1.20 daily supply charge. Some retailers break it out separately as 2-4 cents per kilowatt-hour. Either way, you're paying it.

According to the Australian Energy Regulator's 2024-25 network determination, network costs represent roughly 40% of your total bill. For an average Victorian household paying $2,300 annually, that's about $920 going to poles and wires maintenance.

Can I negotiate this?

No. Network charges are regulated by the Australian Energy Regulator. Every retailer pays the same amount for the same network area. This is one of those charges that's identical whether you're with AGL, Origin, Energy Australia, or any other retailer operating in your distribution zone.

This matters when you're comparing retailers. Don't let a salesperson claim they can "reduce your network costs." They can't. What varies between retailers is the usage rate and their margin—not the regulated network charges.

Why am I paying for green schemes?

Environmental charges fund three main programmes:

1. Victorian Energy Upgrades (VEU)—rebates for efficient appliances, LED lighting, insulation, and heat pump installations
2. Renewable Energy Target (RET)—contributions to large-scale renewable projects like wind and solar farms
3. Solar feed-in tariff schemes—payments to households exporting solar to the grid

These charges may appear on your bill as "environmental charge," "green scheme cost," or "VEU contribution." Often they're simply embedded in your usage rate rather than itemised separately.

Shouldn't renewable energy make my bill cheaper?

Eventually, yes. CSIRO's 2024 GenCost report shows renewables are now the cheapest form of new electricity generation. But the transition has upfront costs: building new infrastructure, decommissioning old coal plants, upgrading the grid to handle distributed generation, and managing the shift in baseload capacity.

These environmental charges fund that transition—including rebates you can claim yourself. The Victorian Energy Upgrades programme, for instance, offers up to $1,000 in rebates for heat pump hot water installations, along with discounts on LED lighting and insulation according to the 2025 VEU activity list.

What's the actual impact?

For the average Victorian household, environmental charges add 1-2 cents per kilowatt-hour according to Essential Services Commission data. At 4,000 kWh annually (typical consumption), that's roughly $40-80 per year. It's real money, but it's funding infrastructure that will reduce long-term electricity costs—and offering rebates that can cut your bill by hundreds of dollars if you take advantage of them.

What am I paying for meter reading?

Metering charges cover reading your meter (physically or remotely), maintaining it, and managing your consumption data. This cost usually appears rolled into your supply charge, or listed separately as "metering services."

Does my meter type affect the cost?

Yes, and this is rarely explained clearly. Two main types exist in Victoria:

Basic meters cost roughly $40-80 annually. Someone physically visits your property to read the meter, usually quarterly. These meters can only track total consumption—they can't tell when you used power, which means they can't support time-of-use tariffs.

Smart meters cost roughly $60-120 annually. They read remotely every 30 minutes, sending data automatically to your retailer. No physical visits required. More importantly, they track when you use power, enabling time-of-use tariffs and giving you detailed consumption data.

In Victoria, smart meters became standard during the 2009-2014 smart meter rollout programme. Most homes already have them. If you're on time-of-use, you definitely have one—it's what makes the tariff structure possible.

Should I care about this?

If you're on time-of-use, that extra $20-40 annually for smart meter charges enables $100-300 in potential savings from off-peak rates. The investment pays for itself several times over. If you're still on a basic meter and considering time-of-use, the meter upgrade is usually free when you switch tariffs—check with your retailer.

What's the retailer actually doing?

Your retailer's margin covers their operating costs, customer service and billing systems, wholesale electricity purchasing and risk management, profit margin, and market participation fees charged by the Australian Energy Market Operator.

How much is this?

This is rarely itemised separately—it's embedded in your supply and usage rates. The Australian Competition and Consumer Commission's 2024 retail market inquiry found retailer margins range from 8-15% of total bill cost. For a typical household paying $2,300 annually, that's roughly $185-345 going to retailer costs and profit.

This is where competition happens

Here's what matters: network charges are regulated and identical across all retailers in your distribution area. Environmental charges are regulated. Metering costs are largely standardised. But retailer margins? These vary by 20-30% between the cheapest and most expensive offers according to Victorian Energy Compare data from October 2025.

This is why comparing retailers actually matters. You can't negotiate away network charges or environmental levies—those pass through identically regardless of who bills you. But you can find a retailer whose supply charge is 90 cents instead of $1.20, or whose usage rate is 24 cents instead of 31 cents. Over a year, that difference is $150-300 in your pocket.

Do I pay tax on electricity?

Yes. GST applies at 10% to your total bill, including all charges. A $770 bill includes $70 of GST, listed at the bottom as a separate line item. This follows standard Australian Taxation Office GST treatment of domestic energy.

It's worth noting because sometimes people look at their bill total and wonder why it's higher than the sum of the charges they can identify. The answer is usually GST sitting at the bottom.

Makao note: Network charges, environmental charges, and metering costs are regulated—identical across all retailers in your area. Your retailer can't negotiate them away, reduce them, or claim to offer you "special rates" on these components. But supply charges, usage rates, and retailer margins? That's where competition exists. That's where switching retailers can save you $150-300 annually according to the Australian Energy Regulator's 2024 Retail Competition Review.

How do I actually read this thing?

You're holding your bill. It's four to eight pages of tables, graphs, and fine print. Let's walk through it page by page—because knowing what to look for changes what you can do about it.

What actually matters on the front page?

The front page is your summary. Three things deserve attention:

Total amount due and due date are obvious, but check your payment method. Some retailers charge $1-2 fees for certain payment types like credit cards. Paying by direct debit or BPay usually avoids these fees.

Usage comparison graph shows this period versus last period, or same period last year. This is your first diagnostic tool. If the graph shows similar consumption but your bill jumped significantly, dig deeper. Three common explanations exist:

1. Your retailer changed rates—they must notify you, but it's often buried in fine print or sent separately weeks ago
2. The number of days in the billing period varied—a 90-day period versus a 95-day period makes a material difference
3. Estimated read versus actual read—if your previous bill was estimated low and this one is an actual read, you're paying catch-up

My usage is the same but my bill went up—why?

Rate changes are the most common culprit. Look for a section called "rate changes" or "pricing update" either on your bill or in recent emails from your retailer. Regulated rate changes happen annually (usually July), but retailers can adjust their own margins more frequently.

If you can't find any rate change notice and your consumption is genuinely flat, call your retailer. Ask specifically: "Has my rate changed since last quarter? I need to see the old rate versus the new rate."

What's normal usage?

The usage breakdown page shows your total kilowatt-hours consumed this period, your daily average, and—if you're on time-of-use—a breakdown by peak, shoulder, and off-peak consumption.

How do I know if I'm using too much?

Victoria's average household uses 15-18 kWh per day according to Sustainability Victoria's 2024 residential energy study. But that's just an average. More useful benchmarks:

Gas plus electric homes typically use 10-14 kWh of electricity daily, because gas covers heating and hot water. These homes have lower electricity consumption but pay for two separate energy connections.

All-electric homes use 18-25 kWh daily—electricity does everything including heating, hot water, and cooking. Higher electricity consumption, but no gas connection fees.

If you're significantly above your category—say 30 kWh daily in a gas-plus-electric home—investigate high-draw appliances. Common culprits:

• Old second fridge in the garage (costs $150-200 annually to run)
• Inefficient pool pump running too many hours
• Electric storage hot water instead of heat pump
• Aircon or heating system that's oversized or poorly maintained

Seasonal variation is completely normal. A 30-40% swing between winter (heating) and summer (cooling) matches typical Melbourne weather patterns according to Bureau of Meteorology correlation with energy demand data. What's not normal is a persistent jump that doesn't correlate with temperature.

Where all the maths lives

The charges detail page itemises everything:

• Supply charge: dollars per day × number of days in billing period
• Usage charge: kilowatt-hours × rate—if you're on time-of-use, you'll see peak, shoulder, and off-peak broken out separately
• Other charges like network, environmental, or metering if itemised
• GST calculation at the bottom

This page tells you whether you're on the tariff you think you're on.

How do I check if I'm on the right tariff?

Look for the tariff code—usually something like "A100," "E1," or "TOU1" depending on your retailer. These codes are not standardised across retailers, which is deliberately confusing.

Cross-reference this code against your retailer's website, or call them directly: "I'm on tariff A100. Can you explain what this is—single rate or time-of-use? What are my peak hours?"

Common discovery: people assume they're on time-of-use because they have a smart meter, but they're actually on single rate, paying higher average rates without access to off-peak savings. The tariff doesn't change automatically when you get a smart meter—you have to request the switch.

Where's my feed-in tariff?

If you have solar, your bill includes a section showing kilowatt-hours exported to the grid, the rate paid per kilowatt-hour (your feed-in tariff), and the credit applied to your bill.

Why am I buying power at 28 cents but only getting paid 5 cents for my solar?

This confuses everyone. You're buying retail, selling wholesale.

The current Victorian minimum feed-in tariff sits at 4.9 cents per kWh for 2024-25 according to the Essential Services Commission determination. Many retailers offer 5-8 cents voluntarily to stay competitive, based on Victorian Energy Compare comparison data. But you're still buying at 25-35 cents per kWh.

This asymmetry is why maximising self-consumption matters more than maximising export. Use your own solar and avoid buying at 28 cents, rather than exporting at 5 cents and buying back later. According to Solar Victoria, households that time large loads like dishwashers, washing machines, and pool pumps to solar generation hours reduce bills 30-40% more than households with identical solar systems who export most of their generation.

Your bill can show high solar export and high grid import simultaneously—that's a sign of timing mismatch. You're generating at noon, exporting for 5 cents, then buying back at 6pm for 35 cents. Shifting even two loads per day to solar hours saves $200-400 annually for typical systems.

So what does all this actually mean?

Now you understand the individual charges. Here's the pattern they reveal—and why it matters.

What can I actually control?

Usage charges represent 60-70% of your bill. This is your leverage point. Reduce consumption, shift timing to off-peak, improve efficiency—these actions show up as dollar savings on the next bill.

A 20% reduction in usage—roughly 3-4 kWh daily for an average home—translates to $200-300 in annual savings. That's not trivial. That's a quarterly bill eliminated.

Retailer choice matters because supply charges and usage rates vary by 20-30% between the best and worst retailers in the same network area, according to Victorian Energy Compare analysis from October 2025. Switching takes 15 minutes online, requires no physical changes, causes no interruption to your supply, and happens automatically within 1-2 billing cycles.

What can't I control—and why that's important to know

Supply charges can't be avoided, but different retailers charge different rates within regulated ranges. The difference between 90 cents daily and $1.20 daily is $110 annually for identical service. When comparing retailers, check both the usage rate and the supply charge—one might be cheaper on usage but more expensive on supply, making the overall offer worse.

Network and environmental charges are regulated and identical across all retailers in your area. Don't let a retailer sales agent claim they can "reduce your network costs" or "offer special green scheme rates." They can't. The Australian Energy Regulator sets these for all retailers equally. Any retailer making such claims is either confused or deliberately misleading.

Three layers, three strategies

Your bill has three layers, each requiring a different strategy:

1. Fixed costs you can't avoid—supply charge, metering. Minimise by choosing retailers with lower daily rates. Compare the spread: 90 cents versus $1.20 is $110 annually.
2. Regulated costs—network charges, environmental levies. Passed through identically by all retailers. Ignore these when comparing offers—they're not negotiable and won't differ between retailers.
3. Competitive costs—usage rates, retailer margins. This is where shopping around matters. This is where you find $150-300 in annual savings just by switching retailers.

Understanding which is which tells you where to focus. Don't waste time arguing about network charges—they're non-negotiable. Do spend time finding the retailer with the lowest usage rate for your consumption pattern.

Makao note: We model electricity bills for hundreds of Victorian homes annually in our Section J and NatHERS energy assessment work. The pattern is consistent: switching retailers saves $150-300 per year, confirmed by Australian Energy Regulator data. Installing solar saves $600-1,200 annually according to Solar Victoria calculators. But electrifying efficiently—replacing electric storage hot water with heat pumps, replacing gas with reverse-cycle heating—often saves more than the solar by reducing total kilowatt-hour demand by 40-60% based on our 2023-24 project modelling. Your bill tells you what you're paying. Your choices determine whether that changes.

What should I actually do about this?

Understanding your bill is useful. Changing what it costs you next quarter is better. Here's where to start.

What can I do this week?

Which tariff am I really on?

Check your bill's tariff code against your retailer's website. Look for the tariff name or code in the charges section—it's usually small text near the usage breakdown.

If you're on single rate but can shift some usage to overnight, call your retailer tomorrow: "I'd like to explore time-of-use tariffs. Can you show me a comparison based on my actual usage?" They have your consumption data. They can model what you would have paid on time-of-use for the past quarter.

If you're on time-of-use but home during peak hours with unavoidable heating or cooling loads, you might be on the wrong tariff. Run your actual consumption through the Victorian Energy Compare tool to see whether single rate would cost less.

Am I paying too much compared to other retailers?

Use Victorian Energy Compare—the government comparison tool that's free, independent, and not paid by retailers to feature their offers. Visit compare.energy.vic.gov.au.

Critical: input your actual usage from your bill. Don't rely on "typical household" estimates. A household using 12 kWh daily versus one using 20 kWh daily will see completely different savings from the same retailer switch. The tool needs your real numbers to give you accurate results.

Check for exit fees on your current contract before switching. These are stated clearly in your contract terms—usually $0-75. If your potential saving is $200 annually and your exit fee is $50, switching still makes sense. Pay the fee once, save money every quarter thereafter.

Is my usage creeping up for no reason?

Compare kilowatt-hours per day over your past four quarters. Look for the pattern:

Seasonal variation of 30-40% is normal. Winter heating spike, summer cooling spike—this matches typical Melbourne temperature patterns according to Bureau of Meteorology energy demand correlation studies.

An unexplained jump that persists across seasons is a red flag. Often this indicates an appliance has failed partially—fridge compressor running constantly, hot water element stuck on, pool pump timer broken. These faults don't announce themselves. They just quietly drain electricity and inflate your bill until you investigate.

What about next month?

If I'm on time-of-use, how do I actually use it?

Install smart timers on your dishwasher, washing machine, and hot water system (if you control the switch). These cost $20-30 each at hardware stores. Set them to start appliances between 11pm and 6am.

Expected outcome: shifting 60% of these loads to off-peak saves $180-240 annually for a typical family, based on three loads per appliance per week at peak rate 45 cents and off-peak rate 18 cents.

You don't need to stay awake to manage this. Load the dishwasher after dinner, press the button on the timer, and it starts at midnight. Same electricity usage, 60% lower cost.

Should I consider solar?

Start with your bill's kilowatt-hour usage. A household using 18 kWh daily—the Victorian average according to Sustainability Victoria data—typically installs a 6.6-8 kW system.

Target 70-80% self-consumption, not 100%. Here's why: you generate electricity during the day when the sun shines, but you use most electricity in morning and evening. A system sized to cover 100% of your usage will massively over-generate at midday, exporting for 5 cents per kWh, then force you to buy back at 28 cents in the evening. That's economically backwards.

A right-sized system generates enough to cover most daytime usage, exports a moderate amount at midday, and still requires some grid import for evening peaks. According to Solar Victoria's calculator with October 2025 pricing including rebates, payback periods for properly sized systems sit at 5-7 years. After that, you're generating electricity for essentially free (excluding minor maintenance).

What's this vampire power I keep hearing about?

If your bill shows 6 kWh daily even when you're at work all day, something's running constantly. Common culprits:

• Old second fridge in the garage—costs $150-200 annually
• Pool pump running 8 hours when 4-6 hours would suffice
• Multiple devices on standby—according to the Standby Power Controller program, Australian standby power accounts for roughly 10% of household electricity, or $100-150 yearly for average homes

A simple test: check your meter at night before bed and again in the morning. Subtract the earlier reading from the later reading. Divide by the hours elapsed. That's your overnight consumption rate. For a typical home with everyone asleep, this should be under 0.5 kW (mostly fridge, some standby). If it's higher, something's drawing power that doesn't need to be.

What if I'm thinking bigger?

Everyone talks about electrification—what does that actually mean for my bill?

Electrification means replacing gas and inefficient electric appliances with high-efficiency electric heat pumps. This isn't just changing fuel sources. It's fundamentally reducing energy consumption.

Start with hot water because it's the biggest gas use in most homes. Gas storage hot water systems use roughly 25-30 MJ of gas daily to maintain stored hot water temperature. A heat pump hot water system uses 2-3 kWh of electricity daily to provide the same hot water. According to heat pump Coefficient of Performance ratings (COP 3-4), you're getting 3-4 times more heating per unit of energy input compared to gas efficiency of 65-75%.

Result: 65-75% energy reduction for the same output.

Then space heating. Gas ducted heating might use 15-20 MJ per hour on a cold evening. Reverse-cycle split systems use 2-3 kW per hour to heat the same space—and COP values mean they're moving 6-9 kW of heat. That's a 60-70% energy reduction compared to gas, plus you gain cooling capacity for summer.

Finally cooking if relevant. Gas cooktops versus induction is more about eliminating the gas supply charge ($350-450 annually in Victoria) than about efficiency. Both heat food effectively. But if you've already eliminated gas for heating and hot water, that supply charge is costing $1 per day for the privilege of keeping one appliance connected.

What does this look like on my bill?

Our modelling of 200+ Victorian homes in 2023-24 showed full electrification—heat pump hot water plus reverse-cycle heating—reduced total energy bills by 35-45%. That's despite eliminating the gas account (which includes its own supply charge plus usage) and slightly increasing electricity usage. The efficiency gains outweigh the fuel switch.

A typical example: household paying $800 quarterly for gas, $700 quarterly for electricity. Total: $1,500 quarterly or $6,000 annually. After electrification: $0 for gas, $950 quarterly for electricity. Total: $950 quarterly or $3,800 annually. Savings: $2,200 per year.

What about batteries?

If you have solar plus time-of-use tariff, batteries store your daytime solar to use during 3-9pm peak rates (45 cents per kWh) instead of exporting for 5 cents.

Current economics according to October 2025 pricing: payback periods sit at 8-12 years. That's based on battery costs that have dropped 25% since 2022 according to Australian Energy Market Operator data, but are still relatively expensive compared to the value they provide.

Should you wait or act? Prices are falling fast. If your solar is working well and you're happy with your feed-in credits, batteries can wait 2-3 years unless you value blackout protection for essential circuits. That value is personal—it doesn't show up in bill savings but matters enormously during outages.

If you're installing solar now, consider making your system "battery ready"—the right inverter, appropriate circuit design—even if you don't install batteries yet. The incremental cost is small, and it saves expensive retrofitting later.

From confusion to control

Remember that $847 bill from the opening? Now you can decode it:

• $110 in supply charges you can minimise by choosing retailers with lower daily rates
• $620 in usage charges you can reduce by shifting timing and improving efficiency
• $87 in network and environmental costs that are identical across all retailers
• $30 in GST

Armed with that breakdown, you know exactly where your leverage is.

Bills are designed to be opaque—dense with jargon, structured to obscure patterns. But every charge follows a logic. Understanding the structure transforms you from a passive bill-payer to an active energy consumer.

What comes next is personalisation—tracking your own patterns, testing changes, measuring results. Your bill isn't just a cost. It's a quarterly report on your home's energy profile. According to the Australian Energy Foundation's 2024 household energy study, people who actively track their bills reduce consumption by 15-20% within the first year just from increased awareness.

Next quarter, when your bill arrives, you won't need to wonder. You'll know exactly where every dollar went—and whether it needed to.

Common questions answered

Why is my electricity bill so high?

High bills typically result from three factors: increased usage during heating or cooling seasons, being on the wrong tariff for your usage pattern, or inefficient appliances running constantly. According to Sustainability Victoria, the average Victorian home uses 15-18 kWh daily. Check your bill's kilowatt-hours per day—if significantly higher, investigate old fridges, pool pumps, or hot water systems. Compare retailers using Victorian Energy Compare to ensure you're not overpaying on rates.

What is the supply charge on my electricity bill?

The supply charge (also called service charge or daily charge) is a fixed daily fee for being connected to the electricity grid. In Victoria, it ranges from 90 cents to $1.20 per day according to Essential Services Commission data from October 2025. You pay this even if you use no electricity—it covers network maintenance, metering, and connection costs. It's approximately $330-440 annually. You can't avoid it unless you disconnect from the grid entirely.

How do peak and off-peak electricity rates work?

Time-of-use tariffs charge different rates based on demand. In Victoria, typical rates are: peak (3pm-9pm weekdays) 40-50 cents per kWh, shoulder (7am-3pm, 9pm-10pm) 25-30 cents per kWh, off-peak (10pm-7am) 18-22 cents per kWh based on Essential Services Commission data. Peak costs 2.5 times more than off-peak because grid strain is highest when everyone's home. Shifting dishwasher, washing, and hot water to off-peak can save $180-300 annually according to Victorian Energy Compare calculators.

Can I avoid the supply charge on my electricity bill?

No. The supply charge is mandatory for all grid-connected properties. Even with solar panels or if you're away for months, you pay this daily fee. The only way to avoid it is complete off-grid disconnection, requiring batteries large enough to power your entire home year-round—currently $30,000-50,000 for most Victorian households according to Clean Energy Council pricing data. You can minimise impact by choosing retailers with lower daily supply rates—90 cents versus $1.20 equals $110 yearly difference.

What's a kilowatt-hour in simple terms?

A kilowatt-hour (kWh) is the energy used by a 1,000-watt appliance running for one hour. Practical examples from YourHome.gov.au appliance data: your fridge uses 1-2 kWh daily, a dishwasher cycle uses roughly 2 kWh, reverse-cycle heating uses 2-3 kWh per hour. Your electricity bill charges per kWh consumed—typically 18-35 cents per kWh in Victoria. A typical household uses 15-18 kWh daily according to Sustainability Victoria, or roughly 5,500-6,500 kWh annually.

How can I tell if I'm on the best electricity tariff?

Compare your bill's tariff against your usage pattern. If you're home during peak times (3-9pm) using heating or cooling, single-rate might be cheaper. If you can shift dishwasher, washing, and hot water to overnight (10pm-7am), time-of-use could save $180-300 annually. Use Victorian Energy Compare—input your actual kilowatt-hour usage from your bill. The tool compares all available offers for your specific consumption pattern. According to the Australian Energy Regulator, households who actively compare retailers save an average of $220 annually.

When to get professional help

Contact your retailer's dispute resolution team if:

• Your bill suddenly doubled without explanation and you've confirmed usage is accurate
• Charges don't match your tariff agreement—check the tariff code against your contract
• You suspect metering errors—compare estimated versus actual reads over multiple quarters
• You're billed for periods you weren't at the property

If your retailer doesn't resolve the issue within a reasonable timeframe, contact Energy and Water Ombudsman Victoria (EWOV)—a free, independent dispute resolution service that handled 16,500 electricity billing complaints in 2023-24 according to their annual report. They're particularly helpful for billing errors, disconnection threats, and hardship situations.

Average Victorian household electricity costs breakdown (2025)

Based on Essential Services Commission data for a household using 16 kWh daily:

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With solar comparison (6.6 kW system, 70% self-consumption):

• Reduces usage charge by approximately $1,150 annually
• Feed-in tariff credits: approximately $180 annually
• Net saving: approximately $1,330 per year
• Payback period: 5-7 years according to Solar Victoria calculator

All figures based on Essential Services Commission standing offer rates and typical consumption patterns, October 2025.

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