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Demand tariffs explained

What is a demand tariff?

Demand tariffs have been designed (by energy distributors) to encourage households and business to use less electricity use 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 charges.

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

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

  1. Supply charges – a flat daily cost charged by your distributor to get electricity to your home or business, and for the maintenance of poles and wires.
  2. 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 also include a third ‘demand’ or ‘capacity’ charge, which is based on your highest energy usage over each monthly billing period (measured in 30-minute blocks) during peak times.   

This means that your bill charges are influenced not only by how much energy you use overall, but also by the highest power ‘demand’ you put on the electricity network. 

Basically, if you turn on several power-hungry devices within a 30-minute period during peak time, your ‘demand’ will go up. And if you’re on a demand tariff energy plan, so will your charges.

Saving money on demand tariffs

It is possible to save money on demand tariffs. 

Electricity usage rates are usually lower than usage rates on a single rate tariff, which is designed to offset the additional demand tariff charges.

You can also avoid high demand tariff charges and save money on your bills by understanding when and how your home uses electricity. 

The easiest and quickest way to do this is to is to sign up for Tracker – a free service that draws real-time data from your smart meter, helping you monitor your electricity usage, set budgets and even preview your next bill. 

Once you understand your usage, you can save money by lowering your electricity demand during the busiest times in two ways:

  1. Taking turns with appliances
    By taking turns with some appliances, rather than running lots of appliances at once, you can avoid high demand peaks during any 30-minute block. For example, running your clothes dryer after cooking dinner rather than using your cooktop and clothes dryer at the same time.
  2. Time shifting to avoid peak times
    Another way to avoid high peaks in demand is to ‘time shift’. This is when you use some appliances outside the peak demand window when the demand charge isn’t being measured. For example, running your dishwasher or pool pump overnight or during the earlier part of the day.

Demand tariff information by state

Click on your state of residence to view links to each energy distributor’s information about 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 Simply Energy bill.

The way demand tariffs are applied is different for each of the three NSW distributors. Please check the relevant link for further information.

Ausgrid

Demand tariff Q&A for residential customers.

Endeavour Energy

Information on network tariffs, including demand charges. 

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. 

See Essential Energy’s Demand Tariff Brochure for more information.  

In Victoria, demand tariffs for residential and small business customers are available on an opt-in basis. 

The way demand tariffs are applied is different for each of the five Victorian distributors. Please check the relevant link for further information.

Ausnet Services

Network tariffs, including demand charges

Citipower

Network tariffs, including demand charges

Jemena

Network tariffs, including demand charges

Powercor

Network tariffs, including demand charges

United Energy

Network tariffs, including demand charges

Residential customers and some small businesses with smart meters can opt into a demand tariff.

Please check the link below for further information on how demand tariffs are applied in South Australia.

SA Power Networks

Network tariffs, including demand charges

Demand tariff FAQs

Will my bill increase on a demand pricing plan?

Many customers on demand tariff pricing plans will be better off as supply and/or usage charges are lower. These lower charges typically more than offset demand tariff charges. See above for more tips on saving money on demand tariffs.

Who decides if I’m on a demand tariff?

Sometimes your distributor will put you on a demand tariff. Or you can opt in/choose to be on a demand tariff in order to save on your electricity bills. 

Can I opt out of a demand tariff?

Yes. Customers on a demand tariff plan from their retailer can request to be allocated to a different tariff. In some cases, small businesses cannot opt out of a demand tariff. This will depend on your location and distributor.

Can I see my demand charges on my bill?

Yes. We list all the charges for the energy you’ve used on page 1 of your bill, including demand charges. We also break down the numbers in the ‘How we’ve calculated your bill section’ on page 3, so you’ll know exactly how much your demand tariff was for each month over the billing period.