Network Charges vs Retail Charges: Who Charges You for What

Two businesses, one set of poles and wires

The distribution network — the poles, wires and substations that physically deliver electricity to your site — is owned by a network business. It is a natural monopoly: there is one network in your area, and it does not compete for your business.

The network business publishes a schedule of tariffs. Every retailer that supplies electricity to your site passes those network charges through to you, at the same rates. This is why network charges are not something a retailer can undercut a competitor on.

What the retailer actually controls

The retailer buys electricity in the wholesale market, manages the billing relationship, and sets the retail component of your price: the energy rates, the daily supply charge, and the terms of the plan.

Competition between retailers therefore plays out on the retail component. Two plans for the same site differ in their energy rates and supply charge, not in their network charges.

This also explains why a plan that looks dramatically cheaper than another is usually a difference in the retail component rather than a genuine discount on the whole bill — and why the percentage saving on the retail component is larger than the percentage saving on the total.

Why the network tariff still matters to you

Even though you cannot choose your network charges, the network tariff applied to your site determines how they are calculated — and that calculation interacts with the plan you choose.

If a comparison assumes the wrong network tariff, the total it produces is not one you can achieve. Getting this right is one reason a bill is a better starting point than an estimate: the bill states the tariff the site is actually on.

The practical upshot

When comparing plans, expect the network component to be common to all of them and focus your attention on where the plans genuinely differ. If a comparison shows a saving, it is worth asking whether that saving comes from the part of the bill the retailer controls.

That framing keeps a comparison honest: it is not about finding a plan that changes your network charges, but about finding the best available retail offer for the network tariff your site is on.