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Domestic power bills have risen enormously across Australia over the last decade. Since 2008, Electricity prices have increased in each state and by 2015 Australia power cost were 52% more expensive than USA. Since the evolution of centralized electricity generation, Power companies have continued to increase prices and its not going to get any better, See the graph below:-

What do we pay for in our Electricity Bill?

The four main things in our power bills.

  1. Wholesale Power (Generating Electricity)

The cost of actually generating energy – whether from renewable energy, coal or gas – is almost a quarter of the cost of the average bill. This is known as the wholesale electricity price.

The wholesale price of power has risen in recent years due to a couple of factors. First, the rising cost of producing power from gas and secondly, the closure of several old and inefficient coal power plants in South Australia and Victoria.

As not enough has been invested in new power generation over the last decade, increased strain is being felt across the entire electricity network. With less electricity supply in the market after the closure of the coal plants, this pushed prices higher.

  1. Poles and wire

Australia has one of the longest electricity networks in the world. The cost of the poles and wires that carry the electricity from power plants to our homes and businesses is passed through to us in our power bills.

Keeping our poles and wires well maintained and building new parts of the electricity network is not cheap. These costs can make up as much as half of our power bills. 

  1. Electricity company Administration and Marketing Cost

This part of our bill covers the cost of maintaining customer databases and billing processes at electricity retail companies, as well as marketing to win new customers.

Information from Origin Energy in 2016 suggested that these costs made up about 15 per cent of the average bill in New South Wales, while a study in September 2017 by the Australian Competition and Consumer Commission into electricity prices across the National Electricty Market found that electricity company costs accounted for about a quarter of the average residential electricity bill.Analysis from the Grattan Institute in 2017 says this component of the average power bill has been one of the biggest causes of recent price rises. 

  1. Environmental Cost

This is the smallest component of the average bill. It includes the cost of meeting the national Renewable Energy Target, as well as the ongoing costs of rooftop solar power support schemes. The cost varies from state to state. According to a 2017 inquiry into power prices by the Australian Competition and Consumer Commission, the cost of environment schemes makes up about 7 per cent of the average bill.

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