“[But] No retailer will tell you about their pricing strategy,” admitted Origin’s Ryan Auger, saying only that it was based on “competitive conditions.”

These include three factors: fluctuations in regulated network prices (poles and wires, around 51 per cent of your bill according to Commonwealth Treasury); wholesale prices (through the National Energy Market, around 20 per cent); and retail costs. 

Essential Energy is one of three poles and wires distributors in NSW but covers 95 per cent of the area. It operates 200,000 kms of powerlines to 820,000 customers. By contrast NSW city-based networks (Ausgrid and Endeavour) together operate around 80,000 kilometres of powerlines supplying more than two million customers.

Essential Energy’s spokesperson said that pricing reflects costs involved in building, operating and maintainance and variations in geographic and climatic conditions, density of population, powerline distance and terrain. 

“These factors alone have the potential to create wide-ranging discrepancies between distribution network pricing data within NSW and across the other States,” she said.

She said that price comparisons across Australia’s 15 electricity distributors show Essential Energy benchmarking well against a similar large rural network and less favourably against metropolitan and smaller rural networks. Cost cutting over three years has resulted in price decreases and savings up to $1.7 billion.

In terms of buying power itself, the National Energy Market (NEM) coordinates the process from wholesale to retailers. Generators offer up electricity to the NEM at specified prices for set time periods. The Australian Energy Market Operator (AEMO) picks energy from the most viable cheapest generator first. Retailers then offer to buy electricity at the market clearing price which is set every half hour for each region. Alternatively they also negotiate contracts directly with the generators to smooth out pricing fluctuations.

“NEM operation is designed to meet electricity demand (or consumption) in the most cost-efficient way,” explains AEMO’s fact sheet.

Wholesale prices can vary widely due to demand, outages, availability, fuel prices, and generator bidding. Sixteen years ago, NSW’ average recommended retail price was $37.69/MWh. On July 1 2016, it was $124.39/MWh (1000KWh). Nineteen days later it was $43.50/MWh.

Today, energy retailers generally offer customers discounts ranging from 10 to 20 per cent and yet 25 per cent of Origin’s 1.2 million customers remain with the standard charges. Meter types also impact on bills.

So as a customer, shop around. If the system is working as it’s supposed to, the more you shop around, the lower the prices should go in order to attract you. Just make sure you ask for the biggest discount possible.