Business electricity can feel unnecessarily complex. Between usage charges, network costs, contracts and retailers, many Australian businesses aren’t entirely sure what they’re paying for or whether they’re on the right plan.
This guide explains how business electricity works in Australia, how pricing is structured, and what to understand before comparing or renewing a contract.
What Is Business Electricity?
Business electricity refers to electricity supplied to commercial premises under a business energy contract. Pricing is based on usage, network costs, market rates and contract terms, and differs from residential electricity in structure and scale.
How Business Electricity Works in Australia
Electricity for businesses is delivered through the same physical grid as households, but the pricing, contracts and billing structures are different.
Your electricity bill generally includes:
- Wholesale electricity costs
- Network (poles and wires) charges
- Environmental and regulatory costs
- Retailer margin and fees
How these are combined depends on your plan and usage profile.
Business vs Residential Electricity: Key Differences
Contract Structure
Business electricity is often presented as being supplied under fixed-term contracts (typically 12–36 months), but in reality this depends on your usage level and state-based thresholds. Below those thresholds, many businesses are legally required to be on flexible or variable arrangements, even though retailers and traditional brokers frequently describe them as “fixed” to create the perception of lock-in. In practice, a large portion of small and medium businesses can move retailers or renegotiate rates far more easily than they’re led to believe.
Pricing
Business pricing is commonly based on:
- Agreed usage rates (c/kWh)
- Daily supply charges
- Demand charges (for larger sites)
Residential plans typically have simpler rate structures.
Usage Profile
Businesses often consume power during peak daytime periods, which influences pricing and network costs.
Demand-Based Pricing
Larger sites may pay additional charges based on peak demand, not just total consumption.
What Impacts the Cost of Business Electricity?
Several factors influence how much your business pays for electricity:
- Total electricity usage
- Time of day energy is consumed
- Location and network area
- Contract length and start date
- Market conditions at time of renewal
Understanding these variables helps businesses avoid overpaying.
Why Business Electricity Prices Change
Electricity prices can move due to:
- Wholesale market volatility
- Network charge adjustments
- Regulatory changes
- Shifts in supply and demand
This is why reviewing contracts before renewal is critical.
How Businesses Can Reduce Electricity Costs
Lowering electricity costs isn’t just about switching retailers. Effective strategies include:
- Reviewing contracts periodically
- Matching plans to actual usage data
- Identifying inefficiencies through audits
- Avoiding automatic rollovers onto higher rates
Better decisions start with accurate data.
How Business Electricity Fits Into Smarter Energy Procurement
Business electricity is one part of a broader energy strategy. When procurement is based on verified usage and market-wide pricing, rather than headline discounts, businesses gain transparency and long-term savings.
This approach is particularly valuable for multi-site or growing organisations.
