Electricity, is used in our homes to power heating and cooling systems, hot water systems, lighting, appliances, and devices like televisions, computers and pool pumps. Some homes may also be connected to natural gas, often used as an alternative to electricity for hot water systems, stovetops/ovens or general room heating.
Water is used in almost everything we do, from drinking to showering and washing the car. Water is an essential resource. In order to conserve water, we must be able to calculate how much we need, how much it costs, and how we can save more for the future.
Interpreting our water, electricity and gas bills correctly can ensure that we are:
- Paying the right amount and not being overcharged
- Using an energy plan that best matches our energy usage and lifestyle
- Able to make informed decisions about ways to reduce our consumption and make savings on our bill
How water and energy usage is measured
Water, electricity and natural gas are connected to our homes through separate meters that measure usage over a period of time called the billing period. Usually this is three months and consumers receive their bills every quarter.
At the end of each billing period, a representative from the supply company will take a meter reading at each property. To determine a consumer's 'actual' usage, the reading on their previous bill is subtracted from their current meter reading. That is,
$\text{usage }=\text{current meter reading }-\text{previous meter reading }$usage =current meter reading −previous meter reading
If a meter cannot be read due to access problems, the supply company will provide an 'estimated' usage amount. The bill will indicate that either an actual (A) or estimated (E) reading has been used.
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| Various electricity meter types |
Understanding the bill
All bills consist of two main charges - a supply charge and a usage charge. The supply charge (or service charge) is fixed and determined by the company. The usage charge is variable and determined by the amount consumed by the customer.
The usage charge is calculated by multiplying the usage by the price per unit of energy or water. The price per unit is also called the tariff.
The two most common tariffs for household bills are a fixed rate and a variable rate.
A fixed rate (or single rate or flat rate), charges the same rate regardless of the amount used or the time of day energy is being used. As an example, electricity might be charged at a flat rate of $22.35c$22.35c per kilowatt hour (kWh).
Let's first look at interpreting bills which include a fixed rate.
Worked examples
Example 1
Examine this sample water bill and answer the questions below.
(a) What is the total amount due?
Think: We want to identify where 'the total amount due' is on the bill. Typically this is at the top or bottom of the bill.
Do: The total amount due is $\$203.38$$203.38.
(b) What was the amount due on the previous water bill?
Think: There is a section at the top of the bill with a payment summary. It indicates the amount of the previous bill, how much you paid towards that bill and the balance owing.
Do: The amount due on the previous water bill is $\$259.84$$259.84.
(c) How much water was used in this quarter?
Think: This is located under 'Consumption (kL)'. It also can be found by finding the difference between the water meter readings.
Do: $20$20 kL of water was used in this quarter.
(d) What is the water usage charge?
Think: The water usage charge depends on the amount of water the customer consumes, which is different from the fixed charges.
Do: The water usage charge is $\$45.52$$45.52. This can be confirmed by multiplying the amount of water consumed in kL by the price rate in dollars per kL.
(e) How much water was used on average per day?
Think: We know the amount of water consumed was $20$20 kL and that the usage period was $95$95 days.
Do: We want to divide the amount of water consumed by the usage period.
| Average daily use | $=$= | $\frac{20}{95}$2095 |
| $\approx$≈ | $0.2105$0.2105 kL/day | |
| Or | $210.5$210.5 L/day |
Example 2
The following table is taken from the back page of Angela's gas bill. It contains her gas meter readings and a calculation of her gas usage over the billing period.
Be aware that gas meters generally measure gas in cubic metres, however usage is charged at a rate per megajoule. For this reason the amount of gas used is multiplied by one or more factors (in this case a heating value and a conversion factor) to convert the usage into megajoules (MJ).
Use the table to answer the following questions.
(a) What is the billing period for this bill?
Think: The billing period is called 'Supply period' on this bill.
Do: It ran from 31 October to 30 November 2018, a period of $31$31 days. While most billing periods last three months (quarterly), consumers can usually organise with their energy company to have their bills sent more frequently.
(b) Calculate the difference in the meter readings, recording your result in cubic metres.
Think: Here we subtract the previous bill's meter reading (Start read) from the current meter reading (End read).
Do: The difference in meter readings is $6103.01-6012.19=90.82$6103.01−6012.19=90.82 m3.
(c) Multiply your answer above by the heating value and the conversion factor to obtain Angela's gas usage in megajoules (MJ). Round your answer to the nearest megajoule.
Think: The usage in cubic metres is $90.82$90.82 m3. We want to multiply this by the heating value and conversion factor.
Do: The usage in megajoules is $90.82\times37.76000\times1.030500=3534$90.82×37.76000×1.030500=3534 MJ.
(d) What word on the bill may indicate to Angela that her gas meter readings may not be correct? Why might this be the case?
Think: What word might mean that the bill is inaccurate?
Do: The word 'Estimate' under 'Read type' indicates that the meter readings were not actual readings. This means a representative from the energy company was not able to access the meter on the 30th November, when they made a visit to Angela's property. The result is that Angela may be overcharged (or undercharged) on her bill. She should ensure that the meter is accessible at the end of the next billing period and that any charging errors are adjusted.
(e) If Angela's gas provider charges a supply charge of $69c$69c cents per day and a usage charge of $\$0.0365$$0.0365 per MJ, estimate the total cost of this bill.
Think: We want to convert the rate from $69c$69c per day to dollars per day ($69c$69c$=$=$\$0.69$$0.69). Then we want to find the supply cost and usage cost over the $31$31 day period, and then add the results.
Do:
| Supply cost for $31$31days | $=$= | $\$0.69\times31$$0.69×31 |
Multiplying daily supply cost by the number of days. |
| $=$= | $\$21.39$$21.39 |
Simplifying. |
|
| Usage cost | $=$= | $\$0.0365\times3534$$0.0365×3534 |
Multiplying the usage rate by the number MJ used. |
| $=$= | $\$128.99$$128.99 |
Simplifying. |
|
| Total cost | $=$= | $\$21.39+\$128.99$$21.39+$128.99 |
Adding the usage and supply costs. |
| $=$= | $\$150.38$$150.38 ($2$2 d.p.) |
Simplifying. |
Practice question
Question 1
A water saving shower head uses $60%$60% of the water an ordinary shower head does.
If Sharon uses $5.8$5.8 kilolitres of water to shower each month, how many litres would she save with a water saving shower head?
If water costs $\$1.9$$1.9 a kilolitre, how much money would Sharon save?
Round your answer to the nearest cent.
Variable tariff
Depending on where we live, we may have a choice of energy retailers. Most will sell their electricity or gas through a choice of plans, each with a different tariff (pricing) structure. Some plans may have a fixed pricing plan or a variable plan, they may also include contracts over a fixed period, like two years, and have penalties for ending the contract early. As consumers we must make careful decisions about which plan best suits our needs.
A variable tarrif is a tiered structure that charges different rates depending on either the amount of usage (block tariff) or the time of usage (time of use tariff).
With a block tariff the first block of energy or water used is charged at one rate. The next block is charged at a different rate, and so on. This structure can be used to encourage water conservation by charging more for high levels of use. Or it could also be used to encourage large consumers to go with particular providers who charge less for high levels of use.
Example:
| Amount used | Rate |
|---|---|
| First $20500$20500 MJ per day | $2.63$2.63 cents per MJ |
| Next $20000$20000 MJ per day | $2.45$2.45 cents per MJ |
| Thereafter | $2.36$2.36 cents per MJ |
With a time of use tariff, the cheapest rate is charged during off peak times (at night typically between 10pm and 7am). The most expensive rate is charged during peak times (typically between 2pm and 8pm, Monday to Friday) and all other times are charged at a shoulder rate. Time of use tariffs are only available for consumers with 'smart meters' installed. Smart meters send usage data directly to the energy company, eliminating the need for regular readings at the meter.
Example:
| Time of use | Rate |
|---|---|
| Peak (2pm to 8pm) | $34.5$34.5 cents per $kWh$kWh |
| Off peak (10pm to 7am) | $12.5$12.5 cents per $kWh$kWh |
| Shoulder (other) | $27.5$27.5 cents per $kWh$kWh |
Worked example
Example 3
On average, James uses $9.5$9.5 kWh of electricity in his home each day. He is currently on a fixed rate electricity plan that has the following charges.
| Charges | Rate |
|---|---|
| Usage | $31.32c$31.32c per kWh |
| Supply | $89.76c$89.76c per day |
James is considering switching to a flexible plan where his electricity usage is charged at different rates depending on the time of day.
| Charges | Rate |
|---|---|
| Peak usage (2pm to 8pm) | $58.58c$58.58c per kWh |
| Shoulder usage (7am to 2pm and 8pm to 10pm) | $26.63c$26.63c per kWh |
| Off peak usage (10pm to 7am) | $16.26c$16.26c per kWh |
| Supply | $89.76c$89.76c per day |
James estimates that during an average day he would use $2.5$2.5 kWh of electricity during peak time, $2$2 kWh during off peak time and $5$5 kWh through the remaining shoulder periods.
(a) If James stays on the fixed rate plan, calculate his total electricity costs for a $92$92 day period.
Think: We want to convert the rates from cents per kWh to dollars per kWh (i.e. $31.32c$31.32c per kWh $=$= $\$0.3132$$0.3132 per kWh). Then we want to find the usage cost and supply cost over the $92$92 day period, and then add the results.
Do:
| Daily usage cost | $=$= | $\text{rate per kWh }$rate per kWh $\times$×$\text{daily usage in kWh }$daily usage in kWh |
Formula for daily usage cost. |
| $=$= | $\$0.3132\times9.5$$0.3132×9.5 |
Substituting. |
|
| $=$= | $\$2.9754$$2.9754 |
Simplifying. |
|
| Usage cost for $92$92 days | $=$= | $\$2.9754\times92$$2.9754×92 |
Multiplying daily usage cost by the number of days. |
| $=$= | $\$273.7368$$273.7368 |
Simplifying. |
|
| Supply cost for $92$92 days | $=$= | $\$0.8976\times92$$0.8976×92 |
Multiplying the daily supply cost by the number of days. |
| $=$= | $\$82.5792$$82.5792 |
Simplifying. |
|
| Total cost (fixed plan) | $=$= | $\$273.7368+\$82.5792$$273.7368+$82.5792 |
Adding the usage and supply costs. |
| $=$= | $\$356.32$$356.32 ($2$2 d.p.) |
Simplifying. |
(b) Calculate his total electricity costs for a $92$92 day period if he switches to the flexible plan.
Think: We want to find the costs associated to each usage type and the supply costs, and then sum the results.
Do:
| Peak usage cost for $92$92 days | $=$= | $0.5858\times2.5\times92$0.5858×2.5×92 |
| $=$= | $\$134.734$$134.734 | |
| Off-peak usage cost for $92$92 days | $=$= | $0.1626\times2\times92$0.1626×2×92 |
| $=$= | $\$29.9184$$29.9184 | |
| Shoulder usage cost for $92$92 days | $=$= | $0.2663\times5\times92$0.2663×5×92 |
| $=$= | $\$122.498$$122.498 | |
| Supply cost for $92$92 days | $=$= | $0.8976\times92$0.8976×92 |
| $=$= | $\$82.5792$$82.5792 | |
| Total cost (flexible plan) | $=$= | $134.734+29.9184+122.498+82.5792$134.734+29.9184+122.498+82.5792 |
| $=$= | $369.7296$369.7296 | |
| $=$= | $\$369.73$$369.73 ($2$2 d.p.) |
(c) Which plan will give James the most savings and how much would he save?
Think: The fixed rate plan is cheaper and we want to find the difference between this plan and the flexible rate plan.
Do:
| Savings | $=$= | $\$369.73-\$356.32$$369.73−$356.32 |
| $=$= | $\$13.41$$13.41 |
Hence, James will save approximately $\$13.41$$13.41 per billing cycle if he stays with the fixed rate option.
Practice question
Question 2
Consider the following households and the approximate gas usage.
- Households with $1-2$1−2 residents use roughly $3100$3100 MJ of gas per quarter.
- Households with $3-4$3−4 residents use roughly $5400$5400 MJ of gas per quarter.
- Households with $5$5 or more residents use roughly $6400$6400 MJ of gas per quarter.
If gas is charged by the gas company at $\$0.02751$$0.02751 per MJ for the first $1220$1220 MJ, and $\$0.02283$$0.02283 per MJ for the remaining, what is the quarterly bill of the average household with $3-4$3−4 residents? Round your answer to the nearest cent.
Australian households have the highest uptake of solar energy systems globally. Over $1$1 in $5$5 houses (December, 2018) are now using solar to supply at least part of their own energy use. Most of these homes use photovoltaic (PV) systems to supplement the electricity supplied to their home from the regular network (the grid).
Besides having lower electricity bills, solar users may be paid a small amount by their energy company for any unused solar-generated electricity that is fed back into the grid. This will appear as a credit on their bill called a solar feed-in tariff.
Usage statistics
Many bills will also give you statistics and graphs which tell you how much you are using in comparison to the past or other households in your area. These statistics can be useful in monitoring use, predicting bills for the future, understanding the impact of heating and cooling on your bill and understanding if you are using above or below the average for your size household.
This image from an electricity bill shows that the household is using above the average amount for a one person household but below the average for a two person household. It also shows the average daily cost and that they have significantly reduced their use from the same time period in the previous year. In the graph we can see the average daily costs rise considerably in the winter months. This household could consider a more efficient heater to reduce their bills.
You can use the information about households in your area to understand if your usage is abnormally high or low. If your usage is high it is worth investigating what appliances or habits make your usage unusually high and if the appliance or habit can be changed to conserve more energy (or water) to reduce you bills in the future.
Find the average amount of gas or electricity used by a household of similar size to your own in your area by using the government's energy made easy website. Use figures found to estimate an annual bill in your area for a similar sized household. How does your household actually compare to the average?
The image below displays the reverse side of a water bill and gives estimates for average water use for households with different number of people and garden sizes during summer. The amount shown was for a two-person household with a small garden - are they using above or below the average for similar households?
How does your water usage compare to the households shown above? You can use a previous bill, check your meter over a week or use the following calculator to estimate your use. What change would make the most significant difference to your household's water use?
Practice question
Question 3
Based on the data supplied, if an electricity company charges $\$0.245$$0.245 per kWh, what would a typical household's electricity bill cost for the entire season of Autumn?
Round your answer to the nearest cent.