Electricity tariffs explained
Tariffs can be tricky, especially as there is more than one type to get your head around. We’ve created a quick guide that answers some of the most common questions.
What is a tariff?
To keep it simple, a tariff is the price you pay for the energy you consume. Tariffs will vary depending on where you live, your energy distributor^, the type of meter you have and the type of tariff itself.
There are four main tariff types for electricity:
1. Single rate tariff
Single rate tariffs have no peak or off-peak periods. You’ll pay the same rate no matter what time of day your household consumes energy.
If you’re home most in the evenings (peak) and use your appliances mostly during this period, a single rate tariff could be a good option for you.
Single rate tariffs can also be known as flat rates or standard rates.
2. Time of use tariffs
A time of use tariff is common if you have a fully communicating smart meter installed at your household and can be used with additional services like solar panels and a battery.
A time of use tariff means that the rate you pay differs depending on the time of day that the energy is used. These times include:
Rates that usually apply in the late afternoon and evening on Monday to Friday and is when electricity costs the most.
Rates that cost a bit less than peak. Shoulder rates usually apply in between peak and off-peak periods.
Rates apply outside of the time of use periods listed above and is generally when electricity is at its cheapest, for example, overnight.
3. Controlled load tariffs
Controlled load tariffs apply for some fixed appliances such as an electric hot water system or slab/ underfloor heating that run over night or during off peak periods. These appliances will be charged a separate rate and often they have their own meter.
Controlled loads work when your energy distributor^ – who operates the poles and wires - is able to reduce the flow of energy to these appliances at peak times. This eases pressure on the network, resulting in lower rates.
To break this down further:
- A Controlled Load 1 is for electricity that is usually available for a set number of hours each day. For example – within the Ausgrid^ distribution network - this is a 6-hour period between 10pm and 7am.
- A Controlled Load 2 is for electricity that is usually split into two periods per day. For example – within the Ausgrid^ distribution network – more than 6 hours between 8pm and 7am, and more than 4 hours between 7am and 5pm.
- Controlled load tariff times can differ across different distribution areas depending on where you live.
4. Demand tariffs
Demand tariffs have been designed - by energy distributors^ - to encourage households and businesses to use less electricity during peak demand times when there is more pressure on the electricity grid.
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.
Simply put, 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.
Learn more about demand tariffs here.
Solar feed-in tariffs
It’s worth noting that the above tariffs are consumption (energy used) tariffs and will differ to solar (generation) tariffs. You can read more about our solar FiTs and rates here.
Choosing the right tariff
Your tariff will initially be set by your energy distributor.^ Choosing the right tariff could help reduce what you pay for your energy, however this will depend on your current circumstances and the type of meter you have:
- Basic meter
Standard peak tariff will apply.
- Digital meter (non-communicating smart meter).
You may be eligible for a peak and off-peak tariff. If you also need a controlled load, this will generally be a separate meter within your meter box.
- Smart meter (fully communicating)
You may be eligible for peak, off-peak and controlled load tariffs. All are charged separately based on the time used or as a single time of use tariff which is more common and reflects the actual time you have used the energy and applicable tariff charge for the period.
Your tariff may change if you choose to upgrade your meter, move your existing meter, install solar panels or add an appliance that needs its own controlled load tariff such as a pool pump or under-floor heating.
You can read more on the different types of meters in our Help Centre.
Looking for further information?
Simply search our Help Centre or view some quick links here:
- Search your current rates (by postcode and energy plan)
- Moving, connections and metering
- Solar made simple
- How to read my bill
- Managing your account and energy plan
^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.
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