Bill shock: Bigger than expected?

If you have received an electricity bill that’s suddenly much higher than your previous bills, there are a number of reasons why this could happen. Here are some common reasons you might see an increase:

• You received an estimated bill instead of an actual bill
• The seasons changed and you used your heating or cooling appliances more
• You were previously receiving a concession or rebate
• There are more people in your household compared to previous billing periods (e.g. you have a new baby)
• There was a price change to your electricity rates
• You spent more time at home (e.g. holiday periods or if you began working from home)
• You have a faulty or new high-usage appliance
• You recently had a smart meter installed and are now paying time of use/flexible pricing (potentially with an additional demand tariff) but haven’t changed your energy usage habits.

Similarly to electricity, your gas bill may see an increase for several different reasons:

• The seasons changed and you’ve been using gas for heating or for cooking more
• You were previously receiving a concession or rebate
• Your household size increased this quarter
• You received an estimated bill instead of a gas bill
• You switched to a gas hot water system
• You have a new or faulty appliance that’s using a lot of gas
• You’re a Ausnet or Multinet customers and have been rolled over to winter rates due to higher gas demand
• You have a gas leak.

Your energy bill is calculated using your energy meter to measure how much electricity or gas your household has used. If the meter reader cannot access your meter or has not given the meter information to your energy retailer, you’ll be provided with an estimated energy bill. This may be referenced on your energy bill with an ‘E’ or ‘estimated’.

An estimated bill may assume you’ve used more power than you have. If this is the case, you may be able to contact your retailer and provide your own meter reading to receive a revised actual bill. If it’s already an actual bill, it may be denoted with an ‘A’ or ‘actual’.

If your bill is accurate, the next step is figuring out if you can afford your energy bill. This might involve reconsidering your current budget to put more money away to pay for your energy bills.

If you can’t afford your bill, contact your retailer as soon as possible to discuss your options. You may be able to go onto a payment plan so you don’t have to pay your entire bill at once, or be eligible for financial hardship assistance.

Having a plan for future unexpectedly high energy bills can take the spark out of power bill shock. You may want to put more money away towards your electricity and gas bills every week or month so you have a financial safety net. If you struggle with large quarterly bills, you could also ask your service provider if you can pay your energy bill monthly (or even more frequently) to make the cost more manageable. This is commonly known as bill smoothing.

Changing your house design or switching to working from home could be contributing to your household energy costs.

• Lifestyle. You and your household’s energy use and choices often cause the most significant impact on your bill. Often, changes like working from home or adding new people to the household may have a noticeable effect on your power bill.
• House design. If you’ve just moved into an older property, your energy bills may increase as the structure is less efficient at naturally managing hot and cold weather. Similarly, if your home’s design doesn’t account for the climate or have an energy-efficient design, you may require artificial heating and cooling to compensate, pushing up your energy bill.
• Heating and cooling. When experiencing extreme heat or cold, households often rely on internal heating and air conditioning. In fact, heating and cooling is the biggest consumer of energy in the household, accounting for approximately 40% of the average Australian’s energy bill.¹

There are also factors outside your control that can affect your energy bill. While you can’t do anything to change these, knowing what influences the energy market can help you predict when your bill may increase so you can plan ahead.

• Inflation. One cause of price increases is economic inflation, where the value of goods and services are targeted to increase by 2-3% per year. Inflation can affect the general cost of living in Australia, not just your power bill, making it even more important to cut costs where you can.
• Network costs. There is a cost associated with transporting energy from generators to your home. This cost is picked up by the distributors and passed onto retailers, who then pass it on to you.
• Wholesale costs. If any generators have an issue and go offline, the lower energy supply to the grid may mean the wholesale price is temporarily increased. In this case, some retailers will raise their costs to cover increase in the wholesale market. Then, if a retailer is reliant on spot prices and the wholesale market prices continues to remain high or volatile the retailer may not be able to afford to continue to sell energy and withdraw from the market. As a result, the amount of competition in the market decreases.
• Government influence. As the government continues to invest in renewable energy sources and plans to phase out fossil fuel generated electricity, it can create a more volatile market that influences energy prices. Government regulation may also interfere by placing price caps on energy, such as the Default Market Offer or the Victorian Default Offer, or fully regulate the market to help maintain affordable energy costs.
• International influence. Factors such as international conflicts, disasters and pandemics can create shortages of energy and raw materials that push up power prices.
• Extreme weather events. Severe weather events such as bushfires or flooding can create damage and disrupt the ability to transport raw materials or transmit electricity. The cost of replacing infrastructure and reductions in the capacity to generate electricity can drive up costs.