Business tariffs

To help you manage your business’s energy costs, it's important to understand the features of the various tariff options that are available.Below we explain the key features of the typical business tariffs. You should also talk to your electricity retailer to understand which tariffs are available to you and ask for their assistance to undertake a tariff comparison which use your previous consumption profile to estimate the best tariff option for your business.

Tariff options vary based on your electricity use

The tariff options that are available to you are determined by the nature of your businesses’ energy consumption and your meter types, which in turn impacts how your business is classified as an energy user.

For example, small business that use than 100,000 kWh/year are classified as a Standard Asset Customer (SAC) – Small. Customers in this class with a basic meter (a meter that does not have remotely read capabilities), will have access to simpler tariffs that are based on total kWh of electricity consumed during the billing period. For customers with advanced meters (electronic metering with remote read functionality), options for small business can include tariffs that feature charges based on when energy is consumed (referred to as Time of Use), and also how much demand (measure in kW) that a business places on the network.

The next classification of businesses, using more than 100,000kWh/year – known as SAC Large are also charged for kWh consumed, and most will also have charges based on the demand on the network (measured in kilowatts kW or kilo volt amps kVA) – these tariffs are usually referred to as demand tariffs. Within this group of tariff options, there are tariffs that also feature time of use charging components, for both consumption and demand.

For the very large customers, those classified as a Connection Asset Customer (CAC) or Individually Calculated Customer (ICC), tariff charges are based on consumption, demand and several other charging parameters related to the way the premise is connected to and uses the network.

If you are unsure of your business classification, this is usually on your electricity bill or you can check with your retailer. Detailed information on our network demand tariffs is available in our Network Tariff Guide on the Pricing and tariffs web page.

How are network demand tariffs charged?

The charges under a demand tariff are based on both your power demand on the network, measured in 30 minute intervals, and the total amount of electricity you use. They are usually based on a monthly billing cycle.

Depending on your monthly bill format for this tariff, you will see:

• a demand charge based on your electricity demand (kW or kVA) on the network
• an energy charge for the total amount of electricity used (kWh)
• a fixed daily service charge
• Metering charges

One way to understand how consumption and demand charges work under demand tariffs is like taking a drive in your car. One charge is for the total distance you travelled (or your total electricity usage, in kWh), and another charge is for the fastest speed you reached (or your peak demand, in kW or kVA).

Calculating demand

The demand charge element of a demand tariff can represent a large portion of your total bill, depending on the tariff rate and your electricity usage. Therefore, its important to understand how demand is calculated so that you can take steps to manage your overall bill.

The billable demand under a network demand tariff is typically recorded in your electricity meter as the average demand, over a 30 minute period* – rather than the single highest instantaneous demand.This is done by recording the energy consumed during the 30-minute period (in kWh) and converting that to average demand by multiplying by 2. By averaging the demand over a 30 minute period, it means that customers are not charged based of a single spike in demand when equipment is turned on. A simple example is:

Consider a factory that uses 100kWh of electricity for 15 minutes when machinery is starting up then 50kWh for the rest of the 30 miinute period. This factory uses 150kWh in this 30 minute period. Therefore, the demand for this period is 150kWh x 2 = 300kW.

The amount of billable demand under some tariffs is calculated using an ‘any-time’ demand approach, meaning your chargeable maximum demand is the highest 30 minute demand period, regardless of when that occurs during the month. Other demand tariffs have a pricing structure that applies charges based on when your maximum demand occurs, giving you an incentive to shift electricity consumption from peak to off-peak charging periods, to save on electricity running costs. Visit our Managing electricity demand web page for general information on measures you can take to manage your sites demand.

*For some large business, demand charge windows may be over different periods.

kVA or kW demand charging

Most customers that are on a demand based tariff will be charged using demand calculated in kilovolt amperes, or kVA, rather than kWs. Measuring demand in kVA takes into account the real power used by the site but also the extra power that may be required due to the site having a poor power factor.  Refer to our Power factor web page for more information on the difference between kVA and kW.