The Queensland Energy Market Explained

By July 21, 2021Utilities

How does the electricity market work in QLD?

The electricity market in QLD is made up of both Distributors and Providers (also known as a Retailer)

Distributors

Distributors supply energy to your home. In Queensland energy distributors include:

  1. Energex (South-East QLD),
  2. Ergon Energy (regional QLD), and
  3. Essential Energy (areas around Goondiwindi, close to QLD/NSW border).

Electricity distributors are responsible for:

  • poles and wires
  • trimming trees
  • meter reading (for old accumulation meters)
  • the safety of their networks
  • emergencies (e.g. lines down)
  • restoring power after outages

Provider/Retailer

Electricity retailers buy electricity on the wholesale market and sell it to individual customers. The provider/retailer is the one who will send you your bill.

For residents in South-East Qld, you may be in the deregulated zone. This means that you have the option to choose between competitive market offers that have been set by a variety of electricity and gas providers in your area.

Market offers are guided by the Default Market Offer (DMO). The DMO is a benchmark price that protects customers from paying excessive prices for their electricity.

The DMO is also the offer that you’re automatically put on if you’ve moved into a new premise but haven’t yet contacted a retailer to supply your energy.

However, If you live in regional QLD, your electricity prices are regulated by the Queensland Competition Authority (QCA).  The QCA updates these prices once a year to reflect the average prices in south-east QLD to ensure regional customers are not overcharged for electricity.

Electricity is regulated in this way because it costs a lot more for retailers to service regional areas. The QLD government works with certain electricity retailers in regional QLD and subsidises the price difference between:

  • costs set by the QCA
  • actual cost for supplying electricity in regional areas.

This enables retailers to service regional areas without overcharging customers.

How Queenslanders are charged for electricity

In Queensland, you’ll pay a fixed daily supply charge (cents per day) to maintain infrastructure and supply power to your home. In addition, you’ll pay a usage rate based on kilowatts per hour (kWh) for electricity and megajoules (MJ) for natural gas.

Usage rates can be charged at a single standard rate for every ‘block’ of electricity used; this is calculated in quarterly, monthly or daily blocks (i.e. how much you use each day, month or quarter). However, you may be charged a different rate for the first block of energy you use (e.g. first 0 to 1,500 kWh) than for any subsequent blocks of energy you use.

Alternatively, if you have a smart meter, you may be able to take advantage of variable rates (i.e. time-of-use tariffs), which charge you depending on what time of the day you use your energy.

Depending on which tariff you’re on, the cost of electricity in Queensland is measured in:

  • cents per day (c/day) for supply charges,
  • cents per kilowatt per hour (c/kWh) for energy usage rates (flat rate or peak, shoulder or off-peak rates), or
  • dollars per kilowatt per month ($/kW/mth) for demand charges from the energy network.

Breakdown of electricity costs

The price you pay for electricity is made up of the following costs:

  • generation costs: creating electricity at a power station
  • transmission costs: building and maintaining Queensland’s network of high voltage powerline infrastructure
  • distribution costs: building and maintaining the network of mid- and low-voltage poles and wires that deliver electricity to homes and businesses
  • retail costs: connecting customers, billing customers and managing customer accounts
  • green scheme costs: associated with the Australian Government’s Renewable Energy Target
  • metering services: associated with your metering equipment, including installing, maintaining and meter reading (for old accumulation and advanced digital meters).

Example of costs within an electricity bill

Based on data provided in Queensland Competition Authority Regulated retail electricity prices for 2020-21, a typical residential customer bill would include the following costs:

  • network (e.g. poles and wires): 42%
  • wholesale generation costs: 34%
  • retail (e.g. call centres, billing): 18%
  • other costs (e.g. renewable energy target): 3%
  • metering: 3%

 

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