A lower usage rate is not always cheaper. Here is how your household's electricity use decides which charge matters more, with a simple worked example.
Written by Alex BPublished 20 October 2026 · Reviewed 20 October 2026
Money Detective is built around practical household money tools for Australians.
Two electricity plans can look completely different.
Plan A might have a lower usage rate but a higher daily supply charge. Plan B might have a higher usage rate but a lower daily supply charge.
Neither one is automatically cheaper. The answer depends on how much electricity your household uses.
A household that uses very little electricity may be affected more by the daily supply charge. A household that uses a lot of electricity may benefit more from a lower rate per kilowatt-hour. The useful question is not which charge matters more in general, but which one matters more for your usage.
Most electricity bills include two main types of charges.
The usage rate is what you pay for the electricity you consume. It is usually shown in cents per kilowatt-hour, written as c/kWh. The Australian Energy Regulator describes this as the variable or consumption charge, because it depends on how much electricity you use.
The daily supply charge is a fixed charge for having electricity supplied to your property. It applies even if you use no electricity during the day. The AER describes it as a fixed charge for supplying the property, separate from the amount of energy used.
Energy Made Easy explains the supply charge in a similar way: it covers the cost of delivering electricity to your property, and you pay it even if you use none.
If you're not sure where to find these figures, start with our guide to reading your electricity bill before comparing plans.
The daily supply charge is the same every day, regardless of whether you use 2 kWh or 20 kWh.
That means it makes up a larger share of the total bill for a household with low electricity use. If you use only a few kWh each day, a high daily supply charge can outweigh a slightly lower usage rate.
As usage rises, the usage rate has more effect. Each extra kWh is charged at the usage rate, so a plan with a lower c/kWh rate can become cheaper once your household uses enough electricity.
This does not mean low-usage households should always choose a low supply charge, or that high-usage households should always choose a low usage rate. It means the balance between the two charges changes with usage.
Here are two fictional plans. The rates are illustrative only and are not current retailer offers.
| Plan | Usage rate | Daily supply charge |
|---|---|---|
| Plan A | 25 c/kWh | $1.20 per day |
| Plan B | 35 c/kWh | $0.60 per day |
Plan A has the lower usage rate. Plan B has the lower daily supply charge.
Over one day:
Plan A: 5 kWh × 25 c = $1.25 usage, plus $1.20 supply = $2.45
Plan B: 5 kWh × 35 c = $1.75 usage, plus $0.60 supply = $2.35
For this household, Plan B is cheaper by 10 cents per day, or about $3 per month over a 30-day billing period.
The lower supply charge matters more because the household does not use enough electricity for Plan A's lower usage rate to catch up.
Over one day:
Plan A: 20 kWh × 25 c = $5.00 usage, plus $1.20 supply = $6.20
Plan B: 20 kWh × 35 c = $7.00 usage, plus $0.60 supply = $7.60
For this household, Plan A is cheaper by $1.40 per day, or about $42 per month over a 30-day billing period.
The same two plans produce the opposite result once the household uses more electricity. Plan A's lower usage rate saves 10 c on every kWh, and that saving eventually becomes larger than its extra 60 c daily supply charge.
In this example, Plan A saves 10 c per kWh but costs 60 c more per day.
The extra supply charge is covered once the household uses enough electricity for that 10 c saving to add up to 60 c:
So, at 6 kWh per day, the two plans cost the same:
Plan A: 6 kWh × 25 c = $1.50, plus $1.20 = $2.70
Plan B: 6 kWh × 35 c = $2.10, plus $0.60 = $2.70
Below 6 kWh per day, Plan B is cheaper in this example. Above 6 kWh per day, Plan A is cheaper.
You do not need to work this out with algebra every time. The practical version is simpler: apply both plans to your own average daily usage, or to the total kWh shown on your bill, and compare the estimated totals.
Usage rate and daily supply charge are often the biggest parts of an electricity bill, but they are not always the whole story.
A real comparison may also need to account for:
Energy Made Easy notes that some bills show more than one usage charge, such as time-of-use plans with peak, shoulder and off-peak rates.
So if your bill has separate peak and off-peak usage, or a controlled-load section, compare those parts separately rather than treating the whole bill as one simple rate.
Solar changes the calculation because there are two sides to consider: electricity you import from the grid and electricity you export to it.
A plan with a lower usage rate may reduce the cost of imported electricity, while the daily supply charge still applies every day. Solar export credits can reduce the bill, but the size of that credit depends on how much electricity your system exports and the feed-in rate offered by the plan.
For a solar household, the best comparison includes imported usage, the daily supply charge and expected export credits. The Free Solar Plan Comparer is designed for that purpose.
Do not choose a plan based on the usage rate or the daily supply charge alone.
A lower usage rate can be better for a household that uses a lot of electricity. A lower daily supply charge can be better for a household that uses relatively little. The only way to know which applies to you is to use your own usage figures.
Once you have your kWh use, usage rate or rates and daily supply charge, enter them into the Free Electricity & Gas Bill Comparer. You can manually enter your current bill figures and the rates from another plan to compare estimated costs side by side.
If you would prefer not to copy every electricity plan rate yourself, Energy Plan Check is an optional paid shortcut. It uses postcode, retailer and AER-published plan data, and lets you select the electricity plans you want to compare. It covers electricity only, not gas, and is not a whole-market comparison service. Its solar feed-in handling is simple rather than designed for complex or tiered solar tariffs.
Enter your kWh use, current rates and daily supply charge to see how another plan's rates would affect your estimated cost.
Compare Plans Using Your Bill →This article provides general information only. It does not take into account your personal objectives, financial situation or needs, and it is not financial advice. The plans and rates in the examples are fictional. Money Detective's tools provide estimates and planning information. Electricity plans and rates change, so check your current bill and plan documents, and seek independent advice if you need it, before making financial decisions.