A supply charge is a daily fee you pay to your energy retailer to stay connected to the grid.
Imagine you were renting a car. The “supply charge” is the fixed daily rental fee you’d pay to use the car, even if you never leave the parking lot.
“Usage charges”, on the other hand, would be the cost of petrol. Like time-of-use and wholesale energy tariffs, fuel prices change throughout the day. This means your total usage charges will depend not only on how many kilometres you travelled, but also the price of petrol when you filled the tank.
Supply charges cover costs that energy retailers incur, including:
- Network costs: Maintaining the poles, wires, and other infrastructure that bring power to your home.
- Metering costs: The costs to read your meter and track energy usage.
- Billing and administration: The costs associated with managing your account, issuing bills, and customer service.
Supply charges vary by state, energy retailer, and energy plan, but they typically range from 80c to $1.50 per day, or between $24 and $45 a month.
They’re usually listed on your bill as a supply charge but can sometimes be called a ‘daily rate’, ‘fixed charge’, or ‘service charge’.
Unlike usage charges, which depend on how much energy you use, supply charges are fixed and don’t change, regardless of how energy efficient you are.
This is why they are an important factor to consider when comparing energy plans. A plan with slightly higher usage charges but a lower supply charge can work out cheaper.
The controlled load charge
If you have a controlled load tariff, you could be charged an extra daily supply charge. These are typically a lot less than the regular supply charge, costing only a few cents a day on average.
Beware the supple supply charge
Energy retailers can change their supply charges whenever they want, but they normally do so every 12 months (usually in July). And, while they’re required to notify you in writing of supply charge adjustments, we recommend keeping an eye on your energy bill.
Are you paying too much in supply charges? Sign up for EnergyFlex to find out if there’s a better plan for you out there.
