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Understanding The Complexity of Electricity Bills for Business Accounts

There are a number of extra charges creeping onto the electricity bills for medium to large commercial/business accounts over and above the usual retail energy and network costs. In some cases, these additions can add as much as 5% to total costs. If you have a large site and have unbundled electricity billing you should see these charges as separate lines on your bill. However, if you have a small site, these charges will be rolled into the bundled prices so they won't be as obvious.

  • Large-Scale Renewable Energy Target (LRET)
  • Small-Scale Renewable Energy Scheme (SRES)
  • Gas Electricity Certificates (GECs)
  • NSW Greenhouse Gas Abatement Certificates (NGACs)Energy Savings Certificates (ESCs)
  • Total Impact
  •  AEMO (Australian Energy Market Operator) Pool Fees
  •  Ancillary Services Fees
  •  Metering

 Some charges are regulated, while others can vary widely between retailers. When seeking a new electricity contract, account for all the extra charges quoted and where they come from as, in some cases, the best rates do not represent the lowest cost offer once all extra costs have been taken into account.


Large-Scale Renewable Energy Target (LRET)
Charges for Renewable Energy Certificates (RECs) have appeared on electricity bills for some years. Now that the renewable energy target has increased to a 20% target in 2020, there will be separate ‘large’ and 'small' schemes, called LRET and SRES. These are federal government charges to fund large-scale renewable energy projects such as wind farms. The charges are not regulatory and can be negotiated with the retailer. RECs under LRET should cost around $3/MWh this year but will more than double over the next few years. The certificates themselves are currently trading at around $35 each but, as the target increases, the certificate cost is also expected to increase to ensure that supply of renewable energy meets demand.


Small-Scale Renewable Energy Scheme (SRES)
This is a new scheme to fund small-scale residential solar power and hot water systems, where certificates generated have a fixed price of $40 each. Charges on electricity invoices will start from 1 January 2011, but they are effectively uncapped, unlike the large-scale scheme, which has a fixed target. The implications of an uncapped scheme for small-scale generators, is a far higher realisation of renewable energy generation than was originally forecast under the expanded RET scheme. To account for this potential, additional renewable capacity and the uncertainty of regulated costs on retailers; most retailers are treating SRES as a pass-through cost to customers. It is expected that these charges to range from between $2 to $6/MWh.


Gas Electricity Certificates (GECs)
GECs apply in Queensland only and are used to fund 15% gas-fired generation in the State. GECs are traded so prices do vary but have remained stable to date. Prices on an electricity bill should be around $1/MWh.


NSW Greenhouse Gas Abatement Certificates (NGACs)
NGACs apply in NSW only with prices also traded and stable. In this case, prices should appear at around $2/MWh on an electricity bill. There is an equivalent AGAC scheme that applies in the ACT.


Energy Savings Certificates (ESCs)
ESCs are applied in NSW to fund energy efficiency initiatives in the State. The number of certificates required will increase annually, and so the cost will also increase annually. For this year, prices on an electricity bill should be around $1/MWh.

AEMO (Australian Energy Market Operator) Pool Fees
AEMO pool fees are fixed for each financial year, and are currently around $0.40/MWh (or 0.4c/kWh).


Ancillary Services Fees
Ancillary services fees vary on a weekly basis and are passed through by the AEMO to retailers who, in turn, pass costs onto customers. Generally the retailers set the price at one level and then reconcile this quarterly or annually. It is advisable that businesses check that this reconciliation has taken place as, in some cases, ancillary services fees are overcharged. On average, these fees should be around $0.50/MWh.


Metering charges are usually set by the retailer, but can range from between $600 to $1,300. It is possible for customers to negotiate directly with their meter provider, as opposed to negotiating through their retailer. Direct negotiation with a meter provider can result in a better price, and can also benefit from gaining access to next-day consumption data via the internet and a variety of reports.





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