One Example of Domestic Electricity Costs

During a clean up I found a package of old electricity bills, going back to 2006.  I entered the data into Excel to see what has happened to our costs over the last 13 years.

We live in regional Queensland where the sole provider is Ergon Energy.  Ergon provides on each bill a handy comparison chart showing our electricity usage is very similar to that of other households like ours.  In 2012 we moved to Rockhampton, which is hotter and drier than Mackay, and the house has a different energy use pattern, but electricity prices are the same in both areas.

While our usage has actually declined by about 5.8 kWhrs per quarter over 13 years as we have become more careful, our annual electricity bill has increased by 138%.  We are being good global citizens, so why are we being punished?  The reasons are as shown in the following figures.

Figure 1:  Nett cost per kWhr of electricity

Nett price

The average annual price of electricity delivered (free of other charges) has increased by about 129%.  This was achieved mainly by a series of ever larger increases on an annual basis to 2014 (113% over 8 years), followed by a drop of about 16% over two years, then another increase of 22% over three years.

However the total cost of electricity supply (all charges divided by kWhrs consumed) has increased by 170%.

Figure 2:  Cost of electricity plus other charges per kWhr

Total price

Note the quarterly costs are very close to the trend line, with larger variation from about 2014.  How can this be achieved?  By increasing daily service fees and quarterly metre reading charges.

Figure 3:  Daily service fees and quarterly metre reading charges

Other costs

The average annual costs of these other charges has increased by 544%!

The unintended consequence is that if we use more electricity, the average price per kWhr decreases.  This is actually a disincentive to decrease carbon dioxide emissions, and an incentive to consume more electricity, and in effect, consumers who use less electricity are subsidising those who use more.

So what is driving these steep increases?

According to the Queensland Times on 20 February 2018,

“Energy Queensland – Energex and Ergon – returned a profit of $881 million in 2017, a decrease of $61 million, due to increased borrowings and transmission charges.”

However, “Queensland’s government-owned energy corporations posted a massive $1.9 billion profit last year.

That was a 45 per cent increase on the $1.3 billion in profits recorded in 2016.”

This was mainly from the power generating corporations CS Energy and Stanwell selling to the National Energy Market.

This embarrassment of riches has led the Queensland government to return $50 each to consumers this year, with another $50 next year- taking with one hand and giving back with the other.  This is very little help to business, industry, and agriculture.

So our retail supplier Ergon buys electricity from the wholesalers on the National Energy Market, with our local generator Stanwell selling to this market at the highest price they can get.  Ergon has to return dividends to the state government.  Their only way to ease the squeeze is to increase the return from consumers.

What is happening in capital cities and other states?  How do others compare?  I have no idea.

I will be interested to see whether the Federal government’s promise of lower power prices really eventuates.

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