What Is a Supply Charge on an Electricity Bill?
A clear Australian explainer on electricity supply charges, fixed costs and why they can change the outcome when comparing plans.
Sancia PereiraEnergy Markets Analyst
A supply charge on an electricity bill is the fixed daily amount you pay to stay connected to the electricity network. Energy Made Easy explains that the daily supply charge is also known as a service charge or fixed charge, and that it applies even when you do not use much energy.
What the supply charge means
The supply charge covers the ongoing cost of getting electricity to your property. It is usually shown in cents or dollars per day, and then reflected as a total amount across the billing period.
Why retailers include it
Electricity retailers and networks still face fixed costs to keep your connection active. That is why your electricity bill usually has both:
- a fixed supply charge; and
- a variable usage charge based on the electricity you consume.
How it affects plan comparisons
The supply charge is one of the biggest reasons a plan with a lower usage rate is not always the better plan. If two plans are close on usage rates but one has a much higher supply charge, the higher fixed cost can outweigh the usage saving.
When it matters most
Supply charge often matters most for:
- apartments and low-usage homes;
- households away from home for long periods;
- homes comparing a flat-rate plan against a time-of-use plan with a stronger fixed cost;
- households comparing electricity and gas together.
If your home uses both fuels, read our main guide on how to compare electricity and gas plans so the supply-charge question is considered as part of the full household energy bill.
Where should you go next?
FAQs
Is the supply charge the same as the usage charge?
No. The supply charge is fixed and usually charged per day, while the usage charge depends on how much electricity you consume.
Do I still pay the supply charge if I use very little electricity?
Usually yes. It applies because it is the fixed cost of keeping the property connected.
Why can a higher supply charge make a plan worse?
Because a high fixed cost can cancel out the benefit of a slightly lower kWh rate, especially in low-usage homes.
Should I compare supply charge before switching plans?
Yes. It should be one of the first line items you compare together with usage rates and tariff type.
Does supply charge matter when comparing electricity and gas together?
Yes. Fixed costs on one or both fuels can materially change the total household energy outcome.