WA Electricity Tariffs Explained

There is a lot of debate about what goes into making up WA electricity tariffs. Particularly as tariffs have risen so substantially over the past couple of years, everyone seems to be looking to pinpoint the drivers.

There seems to be a lot of data available for tariffs in the Eastern States but very little about what goes into making up electricity tariffs in Western Australia.

Infinite Energy has a unique insight via its Electricity Retail business which services Perth and the South West of Western Australia.

Whilst the exact makeup depends on each individual client the following is a good guide for those on the South West Interconnected System in WA:

Many might find it surprising to know that Network Charges are the single biggest component of an electricity bill. Effectively this is the cost to transport the electricity from where it is generated to where it is consumed. That's right - it costs more to transport the electricity via Western Power's network of poles and wires (38.4%) than it costs to actually produce the electricity (33.3%).

Another surprising element for many people is the Peak Demand Capacity or Reserve Capacity Charges. These are charges levied on Electricity Retailers to pay generators to be available a times of peak demand in the market. These payments ensure generators are available whether they are actually called on to produce energy or not. The current Electricity Market Review being undertaken in WA have one of its key areas of focus dedicated to the question of whether WA needs a capacity market. 

There has also been much debate recently regarding the Abbott government's review into the Renewable Energy Target (RET). The RET ensures that 41,000 GWhrs of electricity (around 20% of the nations total) are produced each year from renewable sources. As you can see the direct cost of the scheme is 4.3%. Many reports (including the government's own Wharburton review) have concluded though that the scheme actually brings down the cost of electricity by more than the direct cost to consumers. Why ? Because the RET brings new cheaper forms of electricity (at least from a marginal point of view) into the market and that brings down energy costs in the market.

What you see on your electricity bill

In most cases you won't actually see what makes up your electricity tariff. Your Electricity Retailer takes care of all these charges behind the scenes are charges you a single "bundled" tariff. This is certainly the case for residences in WA and businesses on standard Synergy Gazetted Tariffs.

Infinite Energy's Electricity Retail Business does however provide WA Businesses with the option of having an "unbundled" tariff with all the components separated. This is particularly attractive for businesses that want to actively managed these components. For example, managing peak demand charging in relation to Network Charges or Reserve Capacity Charges.

If you'd like to discuss whether the option of an Unbundled Electricity Tariff is advantageous for your business please get in contact with us and one of Infinite Energy's expert Electricity Consultants can provide you with a no obligation assessment.