What is a demand tariff?

Demand tariffs (or charges) have been designed (by energy distributors) to encourage households and businesses to use less electricity during peak demand times when there’s more pressure on the electricity grid.  

You need a smart meter to be eligible for plans with demand tariffs. 

How are demand tariff plans different to standard tariff energy plans?

Typically, energy costs are based on two types of charges:

• Supply charges – a flat daily cost your distributor charges to get electricity to your home or business and maintain poles and wires.
• Usage charges – the total amount of electricity you use over the billing period (often with different rates for peak, shoulder, and off-peak periods), with rates charged per kWh of energy used.  

If you’re on a demand tariff, your bill will include a third ‘demand’ or ‘capacity’ charge.

The most common types of demand tariffs are:

• Monthly Demand Reset: Residential and small business customers on this type of demand tariff have their demand charges recalculated monthly. The highest energy demand of a customer recorded within each monthly billing period determines the demand charge. At the end of the month, the demand is reset, and the process starts anew for the next billing cycle.
• Seasonal Demand Reset: In certain regions, such as Queensland, residential and small business customers may have demand tariffs that follow a seasonal reset. This demand charge is determined by the highest energy demand of a customer recorded during specific seasons, such as summer or winter. The demand is reset at the beginning of each season, and the highest demand during that particular season influences the charges.
• Annual Demand Reset: In some areas, like New South Wales, residential and small business customers may have a yearly demand reset for their demand tariffs. Here, the demand charge is calculated based on the highest level of energy demand recorded by a customer within a full year. The demand is reset at the end of each year, and the process repeats for the following year.

Essentially, a demand tariff considers not only the total amount of energy you consume but also the highest power demand you place on the electricity network.  

Saving money on demand tariffs 

You can save money on demand tariffs by adjusting your energy consumption to take advantage of lower demand tariffs. Here's what you need to know:

1. Lower Usage Rates: Generally, electricity usage rates on demand tariffs are lower than those on single-rate tariffs. This is designed to balance out the additional charges associated with demand tariffs, allowing you to save money.
2. Understanding Your Electricity Usage: By better understanding when and how your home uses electricity, you can limit high-demand tariff charges and reduce your bills. Signing up for and using Tracker will help you to understand your past electricity usage patterns. Tracker uses data from your smart meter to give you insights into your past usage patterns so that you can adjust your usage behaviour.
3. Lowering Electricity Demand: Once you have insights into your usage, you can save money by reducing your electricity demand during peak times in two ways: 
   a. Taking Turns with Appliances: Instead of running multiple appliances simultaneously, consider using them one at a time. You can minimise the impact on your bill by avoiding high demand peaks within any 30-minute block. For instance, run your clothes dryer after cooking dinner instead of using your oven and clothes dryer simultaneously. 
   b. Time Shifting to Avoid Peak Times: Another effective strategy is to 'time shift' your appliance usage. This means using certain appliances outside the peak demand window when the demand charge is not being measured. For example, run your dishwasher or pool pump overnight or early in the day, outside peak demand periods.

Demand tariff information by state

Click on your state for information about each energy distributor’s demand tariffs. If you don’t know who your energy distributor is, check the Get in Touch section in the top right-hand corner of page 1 of your ENGIE bill.