Demand tariff

What is a demand tariff?

A demand tariff is a charge based on maximum demand for electricity, expressed in kilowatts (kW) which is calculated from the highest energy usage over a specified period.

Demand tariff structures are designed in most cases to encourage less electricity use during peak demand times when there’s more pressure on the electricity network. These structures vary and are set by your electricity distributor.

Why are demand tariffs being introduced?

The electricity networks need to be able to cope with those extreme hot days, so the distributors need to invest in updating and maintaining the network to handle the highest peak of electricity demand, even if it’s only for a few days of the year.

Imagine the electricity network is like a sports stadium.  It would be built to handle demands for a grand final (highest peak demand). The overall cost would be based on a full stadium of 100,000, not the average number of 50,000 people who use the stadium throughout the year.

How can customers save?

Bill control tip #1: taking turn

Your demand is measured in 30-minute blocks during the peak demand window. So, by taking turns with some appliances, rather than running many at once, you can avoid high demand peaks during any 30-minute block.

Demand Tariff

 

 

Bill control tip #2: time shifting

Another way to avoid high peaks in demand is to time shift when you use some appliances to outside the peak demand window.

 

Time Shifting

Components of Demand Tariffs

Tariff components will consist of one or more of:

  • A fixed (or ‘standing’) charge — an annual supply charge that applies at each premises electricity is delivered to ($ per annum) and paid on a pro-rated basis depending on the number of days in the billing period

     

  • A usage charge — a charge that applies to the volume of electricity consumed (in c/kWh), which could be a:

     

    • Flat unit rate (applicable to all times of the day)
    • Peak unit rate
    • Shoulder unit rate
    • Off peak unit rate

       

  • A demand (or capacity) charge — a charge that applies to a customer’s capacity (either dollars per kilowatt $/kW or dollars per kilovolt-ampere $/kVA).

 

  • Victoria

    Demand Structure and Charge Window

    Residential customers — demand is based on the maximum demand (kW) in each month that is recorded between 3pm and 9pm work days with no minimum chargeable demand level (except in the United Energy zone where a minimum monthly chargeable demand of 1.5kW applies).  As peaks occur in summer months, the demand charge will be discounted in non-summer months.

    Small business — demand is based on the maximum demand (kW) in each month that is recorded by the business between 10am and 8pm work days (3pm-9pm work days for AusNet zone) and may be subject to a minimum chargeable demand level.

    Demand Tarriff

    Assignment to demand tariffs – Thresholds and triggers

    On 14 April 2016, changes to the Victorian AMI Tariffs Order were gazetted which only allow a cost-reflective demand tariff to be opt-in for residential and small business customers using less than 40 MWh per annum. The Tariffs Order continues to require us to offer residential customers a flat tariff and a common form flexible time of-use tariff.

    On 12 September 2017 changes to the Victorian AMI Tariffs Order were gazetted which allow medium customers to opt out of a cost reflective flexible AMI retail tariff. This has applied since 1 January 2018.

    • South Australia

      Demand Structure and Charge Window

      Residential customers: Actual Demand charges for residential customers are determined based on the maximum half-hour trading interval since the last meter read (Type 1-4 meters are assumed to be read each calendar month) for:

      1. Summer Peak Demand on all days between 1600 and 2100 local time during November to March only;
      2. Winter Shoulder Demand on all days between 1600 and 2100 local time; and
      3. Off-peak Demand at all other times (the price is zero for actual off-peak demand).

       

      Small business:  Actual Demand charges for business customers are determined based on the maximum half-hour trading interval since the last meter read (Type 1-4 meters are assumed to be read each calendar month) for:

      1. Summer Peak Demand on work days between 1600 and 2100 local time, during November to March only;
      2. Year-round Shoulder Demand on work days between 1200 and 1600 local time; and
      3. Off-peak Demand at all other times (the price is zero for actual off-peak demand).

       

      Demand SA

      Assignment to demand tariffs – Thresholds and triggers

      Residential customers can move to a demand tariff on an opt-in basis provided they have the appropriate metering technology.

      The specific thresholds and triggers that will result in a customer being assigned to a cost-reflective tariff comprise:

      • All large businesses (> 160 MWh pa), from July 2015;
      • All businesses with a maximum demand exceeding 250 kVA, from July 1999;
      • All new/alterations to supply businesses requiring more than 100 Amps capacity (CT
      • metering, about 70 kVA), from July 2010; and
      • All new/alterations to supply small businesses requiring 3-phase supply, from July 2015.

  • New South Wales

    Introduction of demand tariffs for residential and small business customers from 1 July 2019.  The application of demand tariffs is different for each of the 3 NSW distribution businesses.

     

    Ausgrid

    From 1 July 2019, demand tariffs became a default assignment for residential and small business new connections and customers on flat tariffs upgrading their meter by customer choice.

    Tariff assignment policy and tariffs include a demand (introductory) tariff for 12 months for existing residential and small business customers on a flat tariff when they replace their meter due to meter failure. The demand (introductory) tariffs give customers an opportunity to understand their patterns of usage for 12 months before being automatically reassigned to the default demand tariff. Customers assigned to the demand (introductory) tariff have the option to be reassigned to another demand tariff, or to a TOU tariff.

    A new TOU-demand and existing TOU tariffs are opt-out options for all customers assigned to a demand tariff. TOU customers replacing meter for any reason remain on TOU tariffs and can opt-in to demand tariffs.

    Non-cost reflective flat tariffs are closed to new customers.

     

    Demand Structure and Charge Window

    Each demand tariff consists of a:

    • Fixed daily charge (in cents per day),
    • Energy consumption charge (in cents per kWh) with a seasonal TOU structure,
    • Seasonal demand charge (in cents per kW per day).

    The demand measure is the maximum energy consumption recorded over any 30-minute period within the defined seasonal demand window on a working weekday in each month (measured in kW). The resulting demand charge applies for each day in the month (before being reset for the next month).

    The demand window for measuring the maximum demand is aligned with a corresponding TOU peak energy window. In seasons where there is no peak energy on working weekdays, a summer window of 2-8 pm applies.

     

    Endeavour Energy

    Endeavour’s demand tariffs consist of three tariff parameters: a seasonal maximum monthly demand charge, a flat energy charge and a fixed charge.

    To assist in managing the transition to demand tariffs for residential customers, Endeavour Energy is proposing to introduce both a transitional demand tariff and a ‘’cost reflective’ demand tariff to provide flexibility for customers to select the pace of their transition.

    The transitional demand tariff will become the default tariff for all new customers and those existing customers with the required metering who upgrade their network connection to three-phase or the bi-directional flow of electricity. Customers assigned to the transitional demand tariff will have the option to opt-out to the flat energy based tariff or the seasonal time of use tariff.

    The cost reflective demand tariff will be available to all customers on an opt-in basis subject to metering requirements.

     

    Demand Structure and Charge Window

    Tariff Type 1

     

    Tariff type 2

     

    Essential Energy

    Essential Energy’s demand tariffs can only be accessed on an opt-in basis for customers who have an interval or smart meter.

    essneital energy

    Demand Structure and Charge Window

    essential energy demand charge