How the industry works

Even before you turn on a light or appliance, the electricity it uses to work has travelled a great distance to reach your home or business; it works its way through a number of networks.

Here is an overview of the journey energy takes to reach your home and business.

  1. Generation: Most of Australia still gets its energy from fossil fuels (via coal-fired power plants) but we are seeing more and more natural and sustainable methods emerging like solar and hydro power. This is where the energy is captured and transformed into electricity which we can use.
  2. Transmission: This large network carries the electricity from the generation plant to metro and regional areas.
  3. Network transmission: Many distributors own and maintain the poles, wires, meters and equipment that deliver electricity to homes and businesses.
  4. Retailer: Energy retailers buy electricity from the generators via wholesale markets, packaged with transportation services provided by the distributors and sell it to homes and businesses.
  5. Homes and businesses: Lower voltage electricity is sent to homes and business to power lights, appliances and equipment.

energy industry

What does this mean on your energy bill?

Your energy bill is made up of charges from all of the key players in the industry, and each of these charges can vary across the states.

Here’s a typical energy bill breakdown, so you know what you’re actually paying for.

  • The cost of using networks to transport electricity is the largest component 36−57%
  • Wholesale energy costs 21−27%
  • Retailer operating costs contribute 10−15%
  • Government schemes to develop renewable or low emission generation, or promote energy efficiency, make up the remaining 3−8%

To see the breakdown for bills in all states you can view the Australian Energy Regulator’s State of The Energy Market 2014 Report.   

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Date: 14 July 2015
Category: Lumo Energy | Energy Facts

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