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The cost of your electricity bill is made up of many different factors, including the expenses involved in generating and supplying your power, which fluctuate with market variations, plus the costs of your chosen retailer. By understanding each of these factors, you can compare energy plans with confidence and find a better deal for your home or business.
How does electricity reach my home?
How is the Tasmanian electricity price determined?
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The expenses incurred before electricity has even reached your house make up a large portion of your energy bill. These expenses include the cost of generating wholesale electricity, transporting electricity around the state, importing electricity from the mainland and the retail costs of selling power to you. The market conditions that impact each of these stages are explained below.
In Tasmania, about 80% of the state’s power comes from hydropower. In recent years, the Tamar Valley power station was converted from oil to gas, and two wind farms have been established.
While these intra-state power sources are large enough to power the island state, Tasmania is also connected to mainland power via the Basslink electricity interconnector. The Basslink interconnector is a 370 km long high-voltage cable that enables Tasmania to draw on electricity from the National Electricity Market (NEM) via the Loy Yang Power Station in Victoria. The bidirectional connection also means that Tasmania can feed excess electricity into the NEM during times of peak production.
Thanks to the large portion of renewable energy produced in Tasmania, the costs of generating electricity are among the lowest in Australia.
Tasmanian electricity enters the high-voltage transmission network from one of the state’s regional generators, or via the Basslink interconnector. This high voltage network is managed by the NEM and allows electricity to be traded long distances across regions.
From the NEM, electricity is converted to a lower voltage and distributed via TasNetworks. TasNetworks is responsible for maintaining the poles and wires that deliver electricity to your home or business. They are Tasmania’s only distribution network.
The costs associated with building and maintaining the transmission and distribution networks are reflected in your bill.
Unfortunately, Tasmania has the smallest pool of retail competition, aside from states where electricity is still under full government control. Although the Tasmanian government introduced Full Retail Competition in 2014, opening the gates for competitors to enter the market, it wasn’t until 2019 that 1st Energy broke the monopoly of Aurora Energy.
One theory to explain the low number of retailers is that the price cap set by the government has deterred retailers from entering the market. However, the good news is that several other electricity companies have entered the market, with Future X Power following 1st Energy in late-2019, Energy Locals in 2020 and Elysian Energy, CovaU Energy and Glow Power in 2021.
Now that you know the process involved in delivering electricity to your home, we will explain the variables that can affect how much each stage of the process costs. Several factors can increase the cost of generating and distributing electricity in Tasmania. Each of these factors is explained in more detail below.
Even though Tasmania is largely hydro-powered and self-sufficient, the electricity price can still be affected by wholesale price rises in other states that cause the overall cost of electricity in the NEM to rise.
Wholesale electricity prices in Australia are affected by several factors:
Coal prices – in QLD and NSW, the two biggest markets connected to the NEM, the majority of electricity is generated in coal-fired power stations. This means that when the cost of coal goes up, the cost of wholesale electricity also rises.
Coal prices are notoriously volatile. They have been affected in recent years by global distribution issues during COVID-19 and local transport issues caused by bushfires and flooding. Most recently, supply issues have caused prices to rise following sanctions placed on Russian coal in response to the war in Ukraine.
Limited electricity generation – when supply is limited, the deficit pushes the market price of wholesale electricity up. In Queensland, the explosion in the Callide C Unit 4 at the Callide Power Station caused one of the state’s most significant supply issues.
In South Australia and Tasmania, where most of the state’s electricity is generated through renewable sources, supply is impacted when conditions are not optimal for electricity generation. During these times, the states import electricity from other regions, which drives the price of wholesale power up.
High demand – when demand for electricity spikes, the cost of wholesale electricity also spikes. High-demand events are caused by a multitude of factors, including heatwaves in the northern states, and unusually cold winters in the southern states.
Since 2016, Tasmanian residential and small business customers have had the chance to opt into a ToU tariff (also known as a Flexible tariff). The idea of the ToU tariff is to encourage customers to use more electricity during off-peak times, which will save them money while reducing long-term network costs by alleviating the strain on the network infrastructure to meet peak demand.
For residential customers, the ToU tariff (Tariff 93) has two price periods – peak, between 7 am – 10 am and 4 pm – 9 pm on Monday to Friday, and off-peak, which is all other times.
For small business customers, Tariff 94 has three price periods – peak, between 7 am – 10 pm Monday to Friday, shoulder, between 7 am – 10 pm on weekends, and off-peak, between 10 pm – 7 am every day.
Tasmanian customers can save hundreds of dollars by adapting their electricity usage to take advantage of low off-peak rates. This can include using a timer on hot water systems, charging electric vehicles during off-peak times, using grid-connected batteries to buy and store off-peak electricity and using solar batteries to reduce their reliance on the grid during peak periods.
The Tasmanian Economic Regulator sets the standing offer based on the network cost set by the Australian Energy Regulator (AER), the wholesale price of electricity, renewable energy certificate costs, retail operation expenses and the distribution costs of maintaining poles and wires.
The standing offer protects customers from unfairly high electricity costs. This is particularly important in Tasmania where there is limited retail competition.
As you can see, there are a lot of inputs and variables that combine to make the final amount you pay for your electricity. You will see that your retailer provides a breakdown of these costs on your bill. In Tasmania, a typical bill is made up of:
Network costs – 43%
Generator costs – 29%
Retail costs – 13.5%
Renewable Energy Certificates – 9%
Metering – 5%
NEM fees – 0.5%
Despite the limited number of retailers in the market, it’s still worth comparing your electricity plan to find the best deal. Now that you are an expert on all things electricity, you can compare retailers with confidence.
When you look at the plans on offer, you should compare the rates, special offers and incentives. The best plan for you will be the one that suits your specific needs.
Each of the seven retailers in Tasmania offers various rates and discounts for your electricity, so it’s important to compare plans to find the cheapest one for your circumstances.
The market offer is the rate the retailer offers below the standing offer. Each retailer will have a different market offer or offers.
In Tasmania, the key variable to compare is the rates for peak and off-peak electricity. These tariffs can vary significantly and lead to hundreds of dollars saved each year.
You should also look out for market offers with ‘controlled load’ tariffs. These types of tariffs offer different rates for separately metered appliances, such as lights and power (Tariff 31) and heating and hot water (Tariff 41). By having these heavy-usage items on a separate meter, you can make significant savings with a controlled load plan.
Special offers and discounts
As well as different rates, when you compare Tasmanian electricity retailers, you will also see a range of special offers and discounts. These include a pay-on-time discount from 1st Energy and Future X Power and subscription models from Energy Locals and Elysian Energy, which offer you electricity at close to the wholesale price in exchange for a monthly or annual subscription fee.
If you find a special offer or discount that appeals to you, make sure you understand the terms and conditions of the offer. It is common for offers to last for 12 months, and after that, you will be transferred to the maximum rate of the standing offer. To make sure you are always getting the best deal, it’s important to compare your plan every 12 months.
Other incentives and rewards
Among the Tasmanian retailers, you will find more incentives devised to encourage you to choose them as your electricity supplier. These incentives include sign-up credits, discounts for signing up online and loyalty rewards, such as 1st Energy who will give customers on the 1st Plus plan a $50 credit after 6 months and a further $50 after 12 months.
Eligible customers in Tasmania can access concessions for their electricity from the Tasmanian Government’s affordable energy scheme. The Annual Electricity Concession is currently (2022) 140.740 cents per day. To be eligible for this concession you must be a cardholder of a Services Australia or DVA Pensioner Concession Card, Services Australia Health Care Card or an ImmiCard (Bridging Visa E).
In addition, pensioners are eligible for the Heating Allowance of $56 per year and there are concessions for households operating an approved life support system or living with a medical condition that requires the cooling or heating of the customer’s principal place of residence.
These government concessions will be paid on top of any special offer or discount you receive from your retailer.
To find out more contact your energy provider or visit the Tasmanian discounts and concessions page.
Below are two of our favourite retailers in Tasmania and a summary of their leading plan. You can read our full list of retailers here so you can compare and save.
Aurora Energy is the original retailer in Tasmania and had a monopoly on the market until 2019. They offer electricity and gas plans exclusively to Tasmanian residents.
Our favourite feature
Aurora Energy is proud to be 100% Tasmanian. Not only are they owned and operated in Tasmania, with offices in Hobart and Launceston, but they are also committed to several community projects, including their community grants program and partnerships with several Tasmanian not-for-profit organisations.
Our favourite plan
The Aurora Residential Peak & Off-Peak plan is perfect for you if you use most of your power during the day and on weekends. This plan offers low rates for off-peak electricity, which puts you in control of what you spend.
By bundling the plan with the aurora+ app, you can see exactly how much power you are using in real-time, so you can take advantage of off-peak times. The app also updates your energy usage and costs every day so you’ll never suffer from bill shock again!
To switch your plan to Aurora Energy visit www.auroraenergy.com.au.
1st Energy was the first company to break the electricity monopoly when it launched in Tasmania in 2019. This relatively new company was founded in 2014 and services New South Wales, Victoria, Queensland, Tasmania and South Australia, plus Victoria with gas only.
Our favourite feature
1st Energy are trendsetters! Not only were they first on the scene in Tasmania, but this forward-thinking company is also the first Australian energy company to accept crypto payments and one of the few retailers that don’t charge a credit card fee.
Our favourite plan
Our favourite plan for Tasmanian residents is the Electricity RACT Saver. The main appeal is a 6% discount on market usage charges for paying your bill on time. This flexible plan also offers no lock-in contracts, no credit card fees and a monthly billing option.
To switch to 1st Energy visit www.1stenergy.com.au or call 1300 426 594.
By now, you should be an expert in Tasmanian electricity, but that doesn’t mean you have to do all the hard work alone! When you are ready to compare and save on your bill, the fastest and easiest way to do it is through a comparison service like CheapBills.
Our team will talk to you about your unique energy usage habits to make sure you find the best plan for your needs. You will need to consider the size of your home, if you have solar panels and if you have any heavy-load appliances such as underfloor heating, a swimming pool or an electric vehicle. Understanding exactly how you use electricity in your home will help our team match you with the perfect tariff.
Before you commit to a switch, you should also consider your other financial commitments, so that you know your budget. You should look at any expenses you regularly incur, such as home loans, credit cards, insurance and any other financial products. Read our guide on How to save energy in your home to make sure you’re not using more electricity than you need to.
Once you are happy with the electricity plan that our team has recommended, making the switch is easy! We’ll do all the hard work for you, and make sure there is no interruption to your power supply and no stress!
Depending on the terms of your current contract, we may be able to make the switch immediately, or it might be more cost-effective to wait until the end of your plan to avoid exit fees. Our team will discuss this with you when you call.
Give the team a call today on 1300 786 045 or enter your details here to start saving!