Why is my electricity bill so high?

Fast read

If you are faced with higher than expected energy bills, there are a variety of potential causes that should be assessed. Other than a false meter reading, the usual reason is that you and your family are simply using too much energy.

This can be caused by an excess amount of fridges, high hot water consumption via long showers, or overused heating or cooling devices. Other reasons behind a high energy bill may be, outdated inefficient lighting, wastage in standby electricity, and old outdated ducted air conditioning equipment.

To avoid wasting money on electricity, it is important to check all the potential causes and take steps to lower your energy usage. This can include switching to energy-efficient appliances, turning off unused devices, and adjusting your heating and cooling settings.

  1. Uninformed knowledge of rates;
  2. The unknown correction bill (The dangers of an estimated bill);
  3. A broken solar system;
  4. More than 1 fridge;
  5. Water/ pool cleaners/pumps operating  for long hours each day
  6. Electric water heaters running for longer than usual;
  7. air conditioning being operated for long periods;
  8. Other electric heaters being used a lot;
  9. Outdated  inefficient lighting left on for long hours;
  10. Standby appliances are never turned off;
  11. A new energy-zapping device has been installed such as an aquarium.

If you are experiencing high electricity bills, consider examining any of the 11 reasons outlined above.

1. Uninformed knowledge of rates

Many people struggle to understand their energy bills, making it challenging to shop around for better rates. However, the good news is that with a little knowledge, you can make informed choices allowing you to save money on your bills.

Understanding time of use tariffs and peak demand charges

One of the most significant factors that contribute to high energy bills is tariffs, particularly time-of-use tariffs and peak demand charges. A ‘time of use tariff’ means that the price you pay for your electricity varies by the time of day, day of the week, and time of year. This can be confusing and result in households and businesses paying five times more during peak periods, such as a weekday evening, compared to overnight on a weekend. So if you run regular appliances such as the washing machine or dishwasher at night instead of during peak cost periods, significant savings can be achieved. This assumes you do not have solar, because if you have solar – then these appliances should be run during solar generating hours.

Peak demand charge in bills for business

The peak demand charge, which may be seen on the majority of commercial electricity bills, is another item to take into account. These tariffs charge you for the maximum “capacity” you need from the network rather than a “volume” of electricity. This means that even though if you only use the maximum amount of power for 30 minutes on one day a year, the rate still applies to the entire month. Your bill will list it as “demand kVA” or “peak kW.” So see if the maximum amount of power can be reduced by staggering activities.

How to address high electricity bills from poor rates?

To start lowering your energy bill costs, carefully study your gas and electricity bills. You may reduce your energy usage by taking action after you are aware of where the majority of your consumption/expenses are coming from. For example, if air-con or gas heating is your major cost, make sure you invest in good insulation and gap filling to create a downward pressure on your bill.

Also, energy retailers do not reward loyalty. On the contrary, new customers usually get discounts and specials, while loyal customers get milked. Reviewing your energy rates every year is simple thanks to government websites and private companies that compare prices. For families, it is frequently as easy as calling your existing provider and requesting a better rate.

For larger businesses, it is advisable to put your invoices out to tender every few years.

However, it is crucial to be aware that electricity and gas tariffs are complicated and have hidden details. Therefore, it is crucial to compare apples with apples and not just focus on the percentage discount offered or the kWh rate. Instead, ask for the final rate you will pay per kWh, and ALL other charges whether you are being quoted an “inc GST” or “ex GST” rate, and whether your daily service charge is staying the same or going up.

In conclusion, to save money on your energy bills, you need to understand your bills and the factors that contribute to high costs. By taking action, such as switching to a better tariff or reducing your peak period electricity consumption you can reduce your energy consumption and save on your bills. So, take the time to read your bills, understand them and then shop around for better rates to stop paying the ‘lazy energy tax.’

2. The unknown correction bill, causing bill spikes and shock

If you have ever received an unexpectedly high energy bill, it could be due to estimated billing. Here’s what you need to know to avoid these eyewatering ‘correction’ bills.

What are the estimated energy bills?

Energy companies are allowed to estimate your energy usage if they cannot read your meter. The reason your meter was not read could be a dog was in the front yard near the meter, the meter board was locked,  your meter reader was sick for a period or the energy company wants to save money on meter reading (but will not admit it).

The real big problem for you arises when these estimated bills go on for a few periods, and the estimated amount of your consumption is significantly lower than what was used.  You may not even realise that your bills are being estimated, as while it is mentioned on the bill, it usually is not easy to discover.

This can lead to a catch-up moment when one day the real meter reading is undertaken, and then you not only have to pay your normal bill but also the underestimation difference from some of the previous bills. Added all up it will cause a big bill shock as such “catch-up” bills are usually much higher than expected.

Why estimated energy bills can be inaccurate

Energy companies are not always good at making accurate estimates. They may not even adjust their estimates for seasonal fluctuations. Sometimes you have more persons in the house so your consumption spikes, but the energy company uses historical data. The result is often an incorrect bill that does not reflect your actual energy usage. That is not an issue necessarily if they overestimated your use, as you are working up a credit on your future bills. The issue becomes painful when the estimated bill is too low and one day in the future you have to pay for the catch-up.

What you can do about it?

Here are some steps you can take to avoid high ‘correction’ bills on estimated energy bills:

  1. Check your bill details

Keep an eye out for the phrase “estimated” or the letter “E” next to the meter readings on your energy bills. If your bills are consistently projected/estimated, you can typically take a reading yourself and call it in. There is no need to be concerned if your bill has the word “Actual” or the letter “A” next to the reading- as this means a meter is ready to check your meter for that bill.

  1. Use an electricity monitor

Track your energy usage between bills by using an electricity monitor. This way, a bill – whether estimated or not – will never come as a shock. Energy monitors can be installed by a qualified electrician on your meter board or if you have solar you could install the Solar Analytics monitor software.

  1. Take your meter readings

Take your meter readings, maybe on the 1st of each month.  This way, you can have ‘hard evidence’ of your energy usage and avoid paying for any wrong reading. It also lets you become aware of monthly fluctuations. Usually, the meter has a mechanical or digital readout – which shows your consumption in kWh.

If your meter is a smart meter and shows several readouts – usually the highest is the overall kWh consumption since installation of the meter. Then you only note that number and a month later check it again and subtract the NEW higher number from the original one to get your consumption for the month.

Keeping an eye on your energy bills and usage can help you avoid high ‘correction’ bills on estimated energy bills. Be aware of the possibility of estimated billing, take your meter readings, and use an electricity monitor to track your usage between bills. By doing so, you can be sure that you are only paying for the energy you have used.

Electricity Meter
Many customers will now have smart meters installed which are highly accurate and display use in a digital display

3. A failing solar system

A quality solar PV system, preferably with batteries is a great way to create your renewable power and reduce electricity bills for decades. However, some homeowners may still experience high bills, despite having solar panels installed. There could be many reasons from an old system that is very small to a a system that has stopped working.

Why you may be facing high electricity bills, despite having solar installed

There are four main causes of high electricity bills for houses with solar panels. They are

  1. Inadequate knowledge of the PV systems capabilities (size & output);
  2. Decreased performance as a result of panel efficiency decrease or maintenance issues;
  3. Using electricity like there is no tomorrow because we have solar;
  4. Billing or metering errors.

1 – Lack of knowledge

Homeowners could have preconceived notions about how much energy their solar panels generate and when. Some people might believe they can use energy-intensive products, such as air conditioners, for nothing. The size of the air conditioner, the size of the PV array, the weather, the time of year, and the day all play a role in this. Homeowners risk unintentionally using more electricity than their solar panels generate if they are unaware of the possibilities of their panels.

This is especially true if the home has a relatively small PV system such as the famous 6 x 175W 1.5 kW systems. A solar panel system of less than 5 kW, must be considered small.

2 – Maintenance issues

If homeowners don’t know how their solar PV system should perform, they won’t know when something is wrong. While quality solar systems are generally reliable and low-maintenance, lower-spec and cheaper systems are more prone to issues such as faulty inverters, faulty panels, shading, and water-logged connections. Regular maintenance checks can help avoid these issues. Maybe try our output calculator to see if your system performs within expectations.

3 – Using electricity like there is no tomorrow

Sometimes after customers had a solar system installed, they called the installer a few months later to complain that their bill was hardly reduced. Inevitably when the issue is investigated it becomes clear that the household has increased their electricity consumption markedly since they got solar. Having a solar system means you now will get “free” electricity from the sun. It does not mean it’s free for all and we never have to turn off lights or turn off appliances on standby power. So keep your consumption pattern consistent after you get solar and you will get fewer surprises.

4 – Billing or metering problems

Homeowners may also face billing or metering errors that are difficult to identify. If homeowners don’t check and monitor their solar system, they may miss out on benefits from their solar, because the system might have shut down during an overvoltage issue with the grid and no one noticed for weeks.  It’s important to check if the “feed-in tariff” is appearing on the power bills and understand the difference between “self-consumption” and “exported power.”

5 – Tips for avoiding high electricity bills

To avoid high electricity bills, homeowners should take these steps:

  1. Check billing and metering information Homeowners should regularly check their billing and metering information to ensure they are receiving the benefits of their solar system. By understanding the difference between self-consumption and exported power, homeowners can ensure that they are getting the most out of their solar panels.
  2. Install a Solar Energy Monitor A solar energy monitor displays homeowners’ energy usage, solar production, and how they relate to each other. This can help homeowners make adjustments to maximise their utilisation of solar power. Most inverter solutions now offer sexy apps to monitor solar output and in some models household consumption. Have such gadgets on your phone and check them regularly.

Solar & battery systems are a great way to reduce electricity bills, but homeowners must understand how they work and use them during peak production periods to avoid high electricity bills. By knowing their solar panel’s capabilities, and regularly maintaining their panels, inverter and battery a good result is guaranteed.

4. Refrigeration can cost a bundle

The fridge can be one of the biggest energy users in a household., as it runs 24/7. However, modern refrigerators are quite energy efficient, so the issue is not so much about the refrigeration itself, but rather the number of refrigerators a household has as well as the age of the key refrigerator.

1 – Multiple refrigerators and a freezer in households

Households with multiple refrigerators, such as a fridge/freezer, chest freezer, and separate drinks fridge, can easily rack up a considerable electricity bill. This is a common issue in large households with big electricity bills. So the question is – do you need the spare fridge in the garage – or can you get one large modern energy-efficient fridge to replace 2 older ones, which are less efficient?

2 – Refrigeration in commercial settings

For businesses such as cafes, restaurants, and clubs, refrigeration can be the single biggest energy user. The sheer number of refrigerators, including cool rooms, freezer rooms, display fridges and freezers, under bench fridges, and ice machines, can cause a significant increase in energy bills. make sure you defrost your fridges regularly and check seals – as these letdowns will increase electricity consumption.

3 – Fighting high electricity bills from refrigeration

To combat high electricity bills from refrigeration, it is important to consolidate the number of devices in use. Instead of using multiple partially full fridges, use one close to full capacity. Placing non-perishable items, which can benefit from some refrigeration in a fridge on a plug-in timer can also help.

Also, make sure your fridge’s size is appropriate to your family size. having a huge fridge after the kids have moved out might not be necessary,  so make sure your fridge size is appropriate and you do not cool empty air day in and day out.

For households, setting the fridge at 4˚C and the freezer at -15˚C is sufficient, so make sure you do not set the fridge/freezer any colder than needed. In regards to businesses, lower settings may be necessary to ensure safe food handling and rapid chilling of stock.

For cool rooms, it is important to maximise insulation and minimize air changes. This can be achieved by ensuring the door is well sealed and using a PVC door curtain. This prevents cold air from rushing out each time the door is opened.

In conclusion, refrigeration is a key energy user in both households and commercial settings. By consolidating devices and using efficient practices, households and businesses can lower their electricity bills while still keeping their food and drinks at the appropriate temperature.

Modern fridges can be 100% more efficient than their older “nostalgic” cousins

5. The different water pumps throughout a household

Recent data indicates that 13% of Australians now reside in homes with swimming pools. Pool filter pumps go all day and circulate the water and power the pool cleaner, which is a common reason for these households’ high electricity costs. Then there is also pool heating for example via gas, which can cost a lot. Similar to that, in farm environments, irrigation pumps can also consume a lot of electricity.

1 – Hot water reticulation pumps

Large residences and apartment complexes often include hot water reticulation pumps that circulate hot water via pipes to deliver hot water quickly. Although the pumps may not use a lot of energy on their own, they continuously drain the energy from hot water systems, which can be expensive. Reticulation pumps should be turned off, set to the lowest speed, or put on a timer because hot water tanks consume a lot of electricity.

2- Pool pumps and irrigation pumps

Despite improvements in pool pump efficiency, pool shops and swimming pool installers still generally install over-specked filter pumps. They also recommend the pump runs for 8 hours or more per day, which is not necessary in many cases.

Overly large and incorrectly operated pumps can also increase electricity bills. In energy terms, motor speed is critical, as halving the pump speed reduces its power requirement by over 85%. Reducing the operating time of pool pumps can help save money on electricity bills.

For irrigation or transfer pumps, using a smaller pump for a longer time can move the same volume of water, reducing energy consumption. Alternatively, a standalone solar-powered pump can also be installed and will be much cheaper.

Other water pumps

Fish tanks, pond pumps, and water features require circulation pumps of varying sizes, which can increase electricity bills. Electric heaters may also be needed for fish tanks. Using smaller, efficient pumps, and setting them to the lowest necessary speed, can help reduce electricity bills.

Turning off, setting to the lowest speed, using timers for hot water reticulation pumps, and using smaller, efficient pumps for fish tanks, pond pumps, and water features can also reduce energy consumption. Taking these steps can make a significant difference in reducing the regular power bills.

6. Water heaters

Although it is a necessity in our everyday lives, hot water has a price. An average household uses 30% of its energy for hot water systems. Your system will require a lot of energy whether it is a tank or instantaneous system (‘continuous flow’).

Reasons for high electricity bills from hot water

In terms of energy utilisation, hot water already has a high starting point, and things can quickly get worse. Among the causes of high hot water electricity bills are:

  • Ineffective shower heads and plumbing fixtures;
  • Very long indulgent showers and baths via teens and others;
  • A leaky hot water pipe (dripping tap, or leak at the tank);
  • Inefficient hot water generating equipment.

Hot water systems in offices

There is at least one electric hot water tank in practically every office in the nation. They are typically buried somewhere unseen, like a cabinet or a roof hollow. There is one in almost every bathroom and kitchenette. They work like a kettle and boil away day and tight, as soon as the hot water in the tank falls below a certain temperature. So they can go 24/7 and cost a bomb. Then you need to include those trendy rapid hot/cold taps in the mix – they do not come for free.

After hours, it’s not necessary to have instant boiling (or cold) water, thus turning the machine off or setting a timer is advised. This straightforward action can save a lot of energy.

Pool and spa water heaters

Although they are less frequent in homes, pool and spa water heaters are significant energy consumers. They are powered by solar energy (black pipe on roofs), heat pumps, or natural gas. Even solar pool heaters consume a significant amount of electricity. The circulation pump, which may need to work for 8 to 10 hours each day, is the reason for this.

How to save energy when it comes to hot water systems

  1. Reduce hot water usage by fixing any leaks and using efficient water fixtures and shower heads;
  2. Use washing machines on the cold cycle – with special washing powders for cold water;
  3. Use shorter cycles for dishwashers and washing machines;
  4. Consider installing a timer on the hot water system to only heat water during specific times of the day;
  5. If you have an electric tank hot water system adjust the temperature to a lower level, which means less energy is needed for the boosting;
  6. Use a solar water heater or heat pump to heat your hot water. These options are the most energy-efficient ways and much cheaper than electric or gas fuelled water heaters;
  7. For pool and spa water heaters, reduce the operating time of the circulation pump or use a variable speed drive to run it more efficiently. Also set the temperature to a comfortable level, without going to warm as each degree of heating will add a lot of energy costs.
  8. For offices and households with instant hot/cold taps, switch the unit off or place it on a timer after hours.

In conclusion, hot water is a necessity, but it doesn’t have to come at an absorbent cost. By implementing some of the tips outlined above you can reduce your electricity bill and make your hot water usage more energy-efficient.

Water heater
While not that common in Australia, instant electric water heaters are very common in Europe. As they only use electricity when hot water is drawn, they are more efficient than standard hot water tank systems.

7. Ducted air conditioning

High power expenditures are regularly the result of ducted air conditioning in both homes and businesses. Air conditioning accounts for more than 50% of the electricity bill in many homes and businesses. Due to their high input power rating, ducted air conditioners can cause a large rise in your energy bill when left on for extended periods.

The cost of ducted air conditioning

Let’s look at an example to get a sense of how much ducted air conditioning costs. An average household ducted air conditioning system uses 5 kW of power. You may be spending more than $1,500 on power for just one device if you use it for 5 hours per day, 365 days per year. This computation is based on a $0.36 per kWh electricity rate, however, your input power, consumption duration, and tariffs may differ. We suggest running the air-conditioning via timers during the hours your solar system is producing nicely. That way one can pre-cool the house cheaply and arrive home at 6pm, without the need to crank the air-con on MAX.

Ducted gas heating

Ducted gas heating is another type of system that can cause high energy bills. These systems are popular in Victoria, but they can chew through natural gas or LPG. Additionally, they require electricity to power their large air circulation fans. The input rating of ducted gas systems is about 90MJ/h, which is equivalent to 25kW, making them one of the biggest energy consumers in the household. Maybe it’s time to switch to solar and electric heating.

What you can do about high energy bills

If you’re experiencing high energy bills due to air conditioning, there are a few things you can do.

  1. If at all possible, swap out older ducted systems for modern ones or switch to smaller, high-efficiency split system air conditioners for areas required. Because they use less energy, these technologies can lower your energy costs.
  2. Use shade, draft-proofing, solar reflection films on northern and western widows, thick curtains and extensive insulation to keep the heat or cold out of your building. This will help you use less air conditioning.
  3. In the summer, raise the thermostat; in the winter, reduce it. Costs associated with heating or cooling can be decreased by 5–10% for every 1 C change.
  4. When possible, switch to modern efficient heaters, portable fans, and ceiling fans in place of air conditioning.

In conclusion, ducted air conditioning and ducted gas heating can be major contributors to high energy bills. However, by taking some simple steps to reduce your energy usage, you can help lower your bill and save money over the long term.

8. Other forms of home heating

When it comes to high power bills, some surprising culprits might not be immediately obvious. While most people know that air conditioning and older-style lighting can use a lot of electricity, some other appliances and devices can contribute to high bills.

Plug-in electric heaters

A plug-in electric heater can initially appear to be a practical solution to remain warm throughout the cold. They are cheap to purchase and work immediately. However, the cost to operate these heaters is often deceivingly high. For instance, a single 2 kW electric heater running for 8 hours each day might use over $500 worth of electricity in a single quarter. Although they may be inexpensive to purchase, operating them for longer periods can become very expensive.

Invisible heaters

Some of the worst heating culprits are invisible to the user. Underfloor electric or hydronic heating, heated towel rails, and in-slab or underfloor heating can all contribute to high electricity bills, as they are often left running all day.

Clothes dryers, electric ovens, and kilns are also heaters that can contribute substantially to your electricity or gas bills. make sure you operate these devices on time, but make sure the periods are staggered and not on a long cycle.

What can you do about it?

There are several more things you can do to reduce your energy consumption and save money on your power bills. These include:

  • Use timers or other controllers to limit the use of electric heaters, especially continuously running underfloor heating and heated towel rails.
  • Where thermostats are available, use them and set the temperature to something reasonable. Aim for 18 to 20 degrees Celsius for general heating, or much lower if you’re heating the house overnight.
  • Use low-power radiant and conductive heaters, such as an electric blanket, heated throw, or foot mat.
  • Reduce your use of dryers, and if you frequently use them, consider switching to a heat pump drier.
  • To utilise less air conditioning, use shade, draft-proofing, and insulation to keep the heat or cold out of your building in the first place.
  • Use efficient star-rated heaters, portable fans, and ceiling fans as alternatives to air conditioning.
  • In the summer, raise the thermostat; in the winter, reduce it. Costs associated with heating or cooling can be decreased by 5–10% for every 1 C change.
  • If at all possible, replace ducted systems with compact, high-efficiency split-system air conditioners.

In conclusion, by being mindful of the appliances and devices in your home or workplace that can use a lot of electricity, you can take steps to reduce your energy consumption and save money on your power bills.

Radiator Heater that affects electricity bill
While fast to turn on and produce heat and cheap to purchase, radiant heaters if left on for long periods can contribute to severe electricity bill shock, because they are not very efficient

9. Lighting

Lighting is a crucial component of any home or company. However, it can be also a significant factor in the high cost of electricity. Lighting is an excellent place to start if you’re looking for ways to save energy quickly. In actuality, there are huge prospects for energy savings in this sector.

In general, corporate electricity rates are higher than residential ones because of lighting. This does not, however, absolve homes of responsibility. The main issues with lighting are inappropriate control, outdated technology, security lights operating for long periods and installations that exceed specifications.

Old technology

Old lighting technologies such as incandescent, halogen, and fluorescent lamps consume a lot more energy and have higher maintenance costs, than modern lights. With the availability of efficient LED lighting, these old lights should be replaced for up to 90% energy savings.

Over usage

Inappropriate control is another major issue when it comes to lighting. Leaving lights on when they’re not needed, like office lighting left on for 14 hours a day, is a common mistake that can lead to higher energy bills. What about the security lights on the side of the house left on for the whole night? Inefficient lighting control can also be found in fire escape stairwells, or indoor toilets where lights are on 24/7, despite low occupancy levels.

Excessive installation

Even if you have upgraded your lights to LED, using too many of them can still result in a high electricity bill. Many buildings have the same lighting intensity throughout, making no real consideration for the task being performed in each area.

This means a jeweller on the workbench needs much higher light levels than a change room in a swimming pool. Another example is this – you probably want brighter lighting in your kitchen than in your bedroom.

What can you do about it?

To reduce your lighting’s contribution to high electricity bills, there are a few actions you can take. Firstly, upgrade all your lights and fittings to energy-efficient LED lights. With LED solutions for almost all situations, you are sure to find an LED light that suits your needs. Secondly, in low occupancy spaces, install LED lights with sensors to ensure lights are only on when they are needed. Lastly, use an appropriate amount of lighting for a given task, considering the appropriateness of lighting and using a lux meter to assess lighting levels.

In conclusion, reducing your energy consumption through proper lighting is not only environmentally friendly, but it also saves you money. Take the steps necessary to upgrade your lighting and control your energy usage, and you will be sure to see a reduction in your electricity bill.

House with lights
While sexy looking for visiting guests, do you have to have the pool and outside lighting on for long periods, even when the pool is not in use?

10. Standby usage

Standby power, also known as “vampire power,” refers to the electricity consumed by electronic devices even when they’re not in use. It’s estimated that standby power can account for up to 10% of your electricity bill, meaning that your dormant devices could be costing you more than you think. So, how can you prevent standby power from adding to your energy bills?

Unplug your devices when not in use

The easiest way to prevent standby power wastage is to unplug your devices when you’re not using them. This is especially important for devices like phone chargers, which continue to draw power even when your phone is fully charged. You can also use power boards with an on/off switch to make it easier to turn off multiple devices at once.

Choose energy-efficient devices

When shopping for new devices, look for those with high energy star ratings on the label. Devices with a high star rating (4 or more) are designed to use less energy and can help reduce your energy bills. You can also look for devices with power-saving features, such as automatic shut-off or sleep mode.

Adjust your settings

Many electronic devices have energy-saving settings that can help reduce standby power wastage. For example, you can adjust the power settings on your computer to put it to sleep or hibernate mode when not in use. You can also adjust the settings on your TV to turn off after a certain amount of time of inactivity.

Be mindful of your usage

Simply being more mindful of your device usage can also help reduce standby power wastage. For example, if you’re not using your computer for a while, shut it down instead of leaving it in sleep mode. You can also turn off your TV when you’re not actively watching it, instead of leaving it on as background noise, while you snore on the couch.

In conclusion, standby power wastage can significantly contribute to high energy bills. By unplugging your devices when not in use, choosing energy-efficient devices, adjusting your settings, and being more mindful of your usage, you can reduce your energy bills and help protect the environment by reducing your carbon footprint.

In summary

To determine the cause of your high energy bill, start by reviewing your usage patterns and looking for any changes in your routine or appliances. Check for air leaks or other issues that could be affecting your home’s efficiency. You may also want to consider investing in a home energy audit via an expert, which can identify areas where you can improve your energy efficiency and reduce your electricity bills.

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