The jargon of an industry that you are not involved in is always going to be confusing. Over this series of blogs we are to break down the basics – helping you to navigate your energy deal. Think of it as the Cliffs Notes guide to the energy industry!
Generators and Transmission
Not too difficult – they generate the energy and then transmit it to the home. Generators for electricity in Australia are typically brown coal power stations. Transmission systems are the power poles and lines outside on the street. For Gas, the transmission pipes are underground.
Retailer vs Distributor
The distributor is the company who maintains the lines, reads your meters and ensures that the light turns on when you flick the switch. You cannot choose your distributor; they are allocated based on the area that the property is located.
The retailer (the logo on your bill) then manages the payment of the energy you get from the distributor. They ‘buy’ energy from the supplier and then charge you for the usage of it. There is no difference in quality of supply between retailers; only cost, agreement type/term and discount offered.
A good analogy is to think about buying petrol from different service stations. The same product goes into your car, but you pay different amounts depending on where you shop.
Standard Offer and Market Agreements
These terms often come up when you are speaking with door knockers and telesales people.
Bill holders on a standard offer are assigned to the default retailer of the distribution patch they are situated in. Simply put, each area has its own distributor, and if you move there they will automatically put you with their preferred (or default) retailer. These offers do not come with added benefits such as discounts and are based on the standard advertised rates of the retailer. A very complicated way of saying that you get to pay top-price for your electricity.
Market Agreements entitle the bill holder to those benefits and incentives as set out in the contract of service. They generally involve a termed contract and early termination fees. We think these are a much better idea!
We will have some more industry information next week, focusing on understanding your bill.
