Electricity Basics

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Electricity Supply Chain

There are many costs in getting electricity to your home – and charges from all players along the line are bundled into your bill.

Electricity Supply Chain

Electricity supply chain

Electricity generators produce electricity from coal, gas and renewable resources.

Electricity is transported via the transmission network from power stations to major distribution points along high voltage transmission lines.

Electricity distributors own and operate the network of power lines and equipment which converts high voltage electricity to low voltage electricity and delivers it to you.

Electricity is bought in bulk from generators by electricity retailers which then sell it to you. The retailer sends and manages your electricity bills. They also pass through transmission and distribution charges.

Units of Measurement for Electricity

The watt (W) is the basic unit of measuring power – it’s the rate at which an appliance is consuming energy at given time. Electrical appliances and lighting all draw a certain number of watts to operate.

Device tag showing input power in watts

Example power label

A watt-hour (Wh) is one watt of power used for one hour - the accumulated consumption over a period of time.

The following terms are used for multiples of these units:

kW kilowatt 1,000 Watts
kWh kilowatt hour 1,000 Watts used for one Hour
MW megawatt 1,000 kilowatts or 1,000,000 Watts
MWh megawatt hour 1,000 kilowatt hours or 1,000 kilowatts used for one hour

You buy electricity in kilowatt-hours (kWh)

Each kWh can cost you between 9 and 55 cents per kWh depending on your tariff



In the following diagram:

  • A 100-watt light bulb running for 10 hours uses 1 kilowatt hour (1,000 watt-hours = 100 x 10)
  • Ten 100-watt light bulbs running for an hour also uses 1 kilowatt hour (1,000 watt-hours = 10 x 100 X 1)

Different examples of energy consumption

Different examples of energy consumption

Electricity Meters

In Australia, there are 3 different types of electricity meters in use.

Accumulation Meter / Flat Rate Meter

These meters record the total amount of energy you use over a period of time, usually about three months. To be billed for the power you use, a meter reader must come to your property and physically read the meter. You are charged the same amount for the electricity you use, regardless of when you use it.

Examples of accumulation / flat rate meters

Examples of accumulation / flat rate meters

Interval meter / Time of Use meter

An interval meter records energy use over short intervals, typically every 30 minutes. By measuring when as well as how much energy you use, they allow retailers to offer prices and deals based on the time you use power.

To read an interval meter, the meter reader attaches an optical probe to the communications port on the meter. The meter then downloads its 30-minute kWh interval data into the meter reader’s handheld device. This data is processed and validated by your distributor’s metering and billing systems and sent to your electricity retailer to produce your final bill.

Examples of interval / Time of Use meters

Examples of interval / Time of Use meters

Smart Meter

In addition to recording when you use electricity as well as how much you use, smart meters allow wireless communication between your electricity supplier and the meter. This communication makes connecting or disconnecting your electricity, switching retailers or even feeding electricity back into the grid from a solar panel much cheaper and easier. Having a smart meter effectively puts an end to estimated bills from your retailer and visits to your property from meter readers.

Smart meters also give you more choice about how much energy you use. You can read the information recorded by your smart meter, using either an online portal or an in-home electronic display. This information will help you better understand when and how much electricity you use, so you can identify ways to save electricity and reduce your power bills.

Examples of smart meters

Examples of smart meters

The metering information above is summarised from that from Ausgrid and the former Energy Supply Association of Australia. Images sourced from Ausgrid.

Last Updated: 
Wed 10/02/2016

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