How energy is priced

Understanding how energy is priced can be complicated. Here are some of the costs involved in delivering electricity and gas to your home or business.

The costs explained

From buying wholesale energy and providing network services to arranging connections, metering and billing, there are many factors that affect the cost of getting electricity and gas to you. The costs associated with these things shift on a regular basis and can result in changes to energy prices.

  • Wholesale market costs

    The wholesale market cost is the amount we pay to buy enough gas and electricity to supply our customers.


    Electricity can be bought directly from the wholesale electricity market where generator companies sell their output. This is done electronically on the national electricity market (NEM) and prices fluctuate depending on availability and demand.


    Gas can be bought directly from gas extraction or production plant operators or through indirect energy trading markets.

  • Network costs

    A distributor incurs network costs to send energy to homes via poles, wires, pipes and meters. We will pay distributors for the cost of delivering this energy to you.

  • Government and regulatory costs

    Federal and state government schemes can add costs to your energy like the renewable energy targets and energy efficiency schemes.

  • Retailer costs

    AGL has direct and indirect costs in arranging the supply of wholesale energy and network services, including fulfilling regulatory requirements and providing customer service. We calculate these costs into our energy rates.

Looking for more specific information about your bill?

Get a breakdown on the fees and charges listed on your energy bill like supply and usage charges. Learn more about fees and charges on your energy bill.

We’re committed to you in uncertain times

For customers struggling with their energy bills, we have options to help make energy bills more affordable. If you need extra help paying your bills or you're experiencing difficulty, visit our financial support and customer assistance options.

More information about energy prices

Any concessions or discounts you currently have will still be applied to your bill after your rates change.

Energy distributors own and operate the powerlines, substations, cables and pipes that transfer energy to your home or business.

Your distributor can usually be found on your bill, as the contact for emergencies, outages and faults.

A tariff refers to how you’re charged for your electricity usage. The type of tariff you have depends on where you live and what type of meter you have.

Find out more about electricity tariffs

The reference price is a benchmark electricity price set by the government that makes it easier to compare prices between energy retailers.

Find out more about reference price

The Default Market Offer (DMO) is a government initiative to make electricity prices more affordable and and easier to understand when comparing electricity plans between different retailers.

The DMO represents a benchmark, or reference price, for setting and explaining prices to customers. It also acts as a ‘cap’ on standing offer prices, which means they must not be higher than the DMO.

Find out more about electricity and price changes

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