Just where does the money from your electricity bill go? It pays for electricity, you might think. Not really, according to a report released this morning by the Brotherhood of St Laurence. More and more of it is going straight to the pockets of your power retailer.
The report cuts and dices your power bill into its constituent parts to find how much you actually pay for each included service. It finds Victorians spend a lot less to have things like poles and wires than customers in other states, and spend a lot more for the dubious pleasure of dealing with a power company.
The chart below shows the average price per kilowatt-hour, state by state, split into how much of a bill goes to "network charges" - that is, to pay for poles and wires - and how much goes to "non-network charges" (more on that later).
Notice how little difference there is between the full price in NSW and in Victoria? The story we're used to hearing is that electricity is expensive in NSW because the network was "gold plated" under the previous state government there, with the costs passed to customers. That's why so much of the cost in NSW goes to poles and wires. See how little of the cost goes to poles and wires in Victoria? So what are we paying for?
The next chart give you some idea. It shows the change in charges since 2008. The red line is network charges, as above, and the blue line is the total charge. The climbing green line? That's "derived non-network" charges: an estimate of things like the wholesale cost of generating electricity, metering, environmental charges and whatever the retailer charges.
See how the "derived non-network charge" makes up more and more of the bill?
Next, the report strips out a bunch of noise from that non-network charge -- what it calls "exogenous" charges, represented by the blue line in the chart below. These are things like metering, the Victorian Energy Efficient Target and the federal Renewable Energy Target. That gives us the orange line below, which is the cost of wholesale electricity plus the money for the retailer.
So, is it fair to say we're paying more because wholesale electricity is just more expensive? Well, no, according to the report. The next chart shows what wholesale electricity has done over time. It's moved around a bit and, when the timeframe for this report wrapped up in 2014, it was pretty much back where it was in 2008.
So what's left? That is, how much money is going to your energy company? A lot more these days, according to this analysis. It gives the number as a range, with the actual amount paid falling somewhere between an upper and lower bound. Both have been climbing. On average, about three times as much is going to "retail charges" as in 2008.
How can this be? Are we getting phenomenally better service from our retailers compared to just six years ago? Not if the customer is right. Complaints and disconnections are both at record highs. According to the report: "Households in Victoria are less satisfied with their current electricity company, their quality of service, their value for money and market choice than the average of households in the National Electricity Market."
The report is pretty clear that the figures are all approximations, but author Bruce Mountain told Fairfax Media whatever wiggle room there would be in the estimates, he stands by the thrust of the analysis: Victorians are getting a bum deal on power.