When you look at your bills, you will notice several charges are combined to reach the total amount that you pay. It’s important that you understand each charge so that you can compare electricity plans fairly.
Supply Charge: The supply charge on your electricity bill is the base cost for your retailer to supply power to your home. This charge is a combination of a cost from the distributor, covering the cost of providing, maintaining and reading the customer’s meter, as well as maintaining the distribution poles and wires that transport power to the customer’s property.
Demand charge: The demand charge is an additional fee charged for using power during the highest power demand times, usually between 3pm to 9pm on weekdays. This time period is referred to as ‘peak hours’. When you compare electricity plans, make sure to look for a provider that offers a good off-peak rate, and if you can, try to consume power during off-peak hours to reduce the cost of your bill.
Distributor Charge: If you notice a distributor charge on your bill, this is due to actions outside the regular supply of power to your home. A distributor charge is the cost of additional services such as same-day connections or emergency works.
Consumption charge: The consumption charge is the total amount your retailer will charge you for the amount of power consumed by your household or small business, based on your daily usage. This cost can vary depending on your plan - if you have a fixed rate plan or variable rate plan - and any discounts or special offers you are eligible for. When you look at electricity rates compare the consumption charge because this is the part of your bill you have the most control over.