Residential tariffs
Confused about electricity tariffs? Have you recently moved to, or will soon be moved to, a demand or time of use based tariff?
The information below will help explain how electricity tariffs are developed, how and why tariffs are changing, and what it means for you.
The electricity industry components
To understand about how electricity tariffs are developed, and prices set, it’s important to understand the key components of the electricity industry. The electricity industry is made up of 4 main types of organisations, all with important roles:
- Electricity generators – (including large and small generators, fossil fuel and renewable sources)
- Electricity transmission network – the high voltage power lines that bring power from the generators to the local distribution network
- Distribution network operators – the local electricity networks
- Electricity retailers – those that sell power to you and provide your electricity bill.
Your electricity bill components
As a residential consumer, you will have an electricity account from an electricity retailer, who sends you a bill based on your consumption of electricity under the tariff. For most residential customers, electricity bills are made up of three main components:
- Network charges – these are the regulated charges we provide to your retailer to cover the cost of building, maintaining and operating the poles and wires and other infrastructure to safely supply your homes and business. We typically charge your retailer both a fixed fee and a consumption fee that may change depending on when/how you choose to use the network. On your bill, the fixed fee may be shown separately as “supply charge” or “service charge” – these charges are normally a fixed rate per day. The network consumption-based fees are typically included with other consumption based retail fees, into a single consumption charge, per kWh, and per kW (if you are on a demand-based tariff).
- Retail charges – these are the costs associated with purchasing electricity from electricity generators and other related costs of having an electricity account. These are consumption-based charges1 with the more electricity you use, the more you pay, based on the structure of your retail tariff.
- Metering charges – these are the costs associated supplying and maintaining the necessary metering hardware in your premises. Some retailers have this as a separate line item on your bill, others incorporate metering costs in your retail charges.
We pass our network costs on to retailers in the form network tariffs, which make up a significant part of your electricity tariff that is set by your electricity retailer. The role of the electricity retailer is to incorporate our network tariffs into the retail tariffs they offer to you.
We are required to review our network tariffs every 5 years and update the prices of those network tariffs every 12 months.
There are changes happening to how electricity is being charged. To help you manage your home’s energy costs, it's important to understand the features of the various tariff options. You should also ask your electricity retailer which tariffs are available to you, and see if they can help to use your energy usage profile to estimate the best tariff option for your home.
Read on to learn more about the key features of the residential network tariffs.
Residential network tariffs are changing
The way that network tariffs are structured is changing. In the past, most tariffs featured a fixed daily charge plus a variable cost based on how many kilowatt hours (kWh) of electricity was consumed during the billing period, regardless of what time of day the consumption took place.
As there are times when the electricity network is used more heavily (peak times) and times when the network is underutilised (off-peak times), this approach to charging doesn’t reflect the cost of generating or supplying electricity.
New demand and time of use tariffs
To help better manage the network and avoid the need to build more network capacity for peak times, tariffs that encourage you to use less power in peak times, and more power in off-peak times have been developed.
These new tariffs include:
- Demand tariffs – these tariffs add a charging element that charges based on the amount of electricity demand (measured in kilowatts) the premises places on the network. The demand charge can be based on either the single highest demand that occurred during the billing period, or the highest demand that occurred during the peak demand charging ‘window’ (for example, 4pm to 9pm weekdays and weekends) - view our animation below to find out more.
- Time of use tariffs – as the name suggests, these tariffs have charges based on when electricity is used, with peak times having higher rates, off-peak times having lower rates - we’ll have animation to help explain this tariff soon.
Demand tariffs explained
Skip to descriptionIn the past, most customers have been billed for electricity on a flat rate tariff, where they are charged the same rate for electricity consumption throughout the day.
If you have a new smart meter in your switchboard that has a communication antennae, you can switch to a demand tariff, if your electricity retailer offers these types of tariffs.
Some households may be better off on a demand tariff without doing anything, while other households may be able to make a few changes to how they use appliances to reduce their electricity costs.
Demand tariffs are designed so each household only pays for its share of how much demand or how little demand it puts on the electricity network during the busiest time.
it's a bit like booking flights. If you book flights over the busy holiday season, like Christmas, you can expect to pay more than if you were to book flights during the off-peak season.
For households on a demand tariff, this busy time, or peak period, is typically 4 to 9 pm each day.
On a demand Tariff, part of your electricity bill reflects how much demand your household puts on the network during this peak period.
To work out each customer’s demand, we look at the total kilowatt hours used in each half hour block, and convert that to half hourly demand – rather than the highest instantaneous demand - between 4pm and 9pm each day.
The highest reading over the month will be used to calculate the monthly demand charge.
So, the more appliances you run during the same half hour block between 4pm and 9pm each day, the higher your demand charge will be.
That's where you can make a difference. It's called load shifting.
By changing the time of day you use some appliances, and using them less during the peak period, your household could have a lower demand charge and lower electricity bills.
Think about shifting when you run appliances that you don’t need to run during the peak period, like your dishwasher, washing machine, clothes dryer or pool pump, and use them outside of the peak period of 4 to 9 pm.
When you need to use some appliances during the peak period, you can still reduce your demand by ‘staggering’ when you run these appliances.
Using built in timers on your appliances, or timers you can plug into your power points, is a great way to set and forget when these appliances run.
Once load shifting and staggering becomes a daily habit in your household, your overall electricity bill could be lower on a demand tariff.
For more on tariffs visit our website.
Demand tariffs explained
This video explains what demand tariffs are and how adjusting your electricity usage can help you more effectively manage your power bill with a demand tariff.
Time of Use Tariffs
Skip to descriptionIn the past, most customers were billed for electricity on a flat rate tariff where they are charged the same rate for electricity used throughout the day.
If you have a new smart meter in your switchboard that has a communication antenna, you may be able to switch to a time of use electricity tariff.
Some households may be better off on a time of use tariff without doing anything, while other households may be able to make a few changes to when they use appliances to reduce their electricity costs.
Time of use tariffs are designed so each household only pays for how much or how little electricity they use at various times throughout the day, with higher charges for electricity used during peak times.
It's a bit like booking flights. If you book flights over the busy holiday season, like Christmas, you can expect to pay more than if you were to book flights during the off-peak season.
For households on a time of use tariff, there are usually three different charging periods. Daytime 9am to 4pm; peak 4pm to 9pm; and overnight 9pm to 9am. These time periods could be different depending on your electricity retailer, so check the times with them.
On a time of use tariff your electricity bill will show how much electricity you consumed, in kilowatt hours, in each of those periods.
For each of those periods different electricity rates apply, with the 4pm to 9pm peak period the most expensive, the daytime 9am to 4pm period the cheapest; and the overnight period 9pm to 9am a bit more expensive than the daytime period.
You can save money by load shifting. By changing the time of day you use some appliances, and where possible using them less during the peak period, your household could have lower electricity bills.
Shifting appliances that use a lot of electricity away from the peak period, like your dishwasher, washing machine, clothes dryer, or pool pump, will have the greatest impact on reducing your electricity bill. But we also suggest shifting small appliances to outside the peak period where you can.
Using built-in timers on your appliances or timers you can plug into your power points, is a great way to set and forget when these appliances run. Put a note on your fridge to remind everyone in your household when to run these appliances.
Once you get used to adjusting when you run appliances to suit a time of use tariff, you will be on your way to making on-going savings on your electricity bill.
Talk to your electricity retailer today about time of use and other tariff options.
For more on tariffs, visit our websites.
Time of use tariffs explained
This video explains how a time of use tariff works and how you could adjust your electricity usage to manage your electricity costs.
Primary and secondary tariffs
To understand what these new tariffs might mean for you, there are a few other things to understand about electricity tariffs, like primary tariff and secondary tariffs:
- All households have a primary tariff – this is the main tariff for your home appliances. The time of use consumption tariffs and demand tariffs mentioned above are example of primary tariffs, as is the flat rate tariff (sometimes referred to as Tariff 11, but electricity retailers often refer to them by different names)
- A secondary tariff is an optional extra tariff that households can choose to have certain appliances like pool pumps, hot water systems and air conditioners connected to. Secondary tariffs are sometimes referred to as economy tariffs or load controlled tariffs, because they are cheaper than primary tariffs and the power supply to those appliances can be interrupted for up to 6 hours per day, to help reduce load on the network. Common names for these tariffs are Tariff 33 or Tariff 31 or Controlled Load 1, Controlled Load 2, though electricity retailers may refer to them by different names.
- Electricity demand considers the rate of electricity consumption in a particular time period, usually measured in 30-minute intervals. Whereas electricity consumption is simply the total amount of electricity used. A good analogy to understand the difference between consumption and demand is taking a trip in your car. The total distance you travelled (km) would be the consumption (kWh); the highest speed (km/h) at which you travelled is equivalent to demand (kW).
- Thinking about this more, think about the example of 2 households – they both consume say 24 kWh of electricity per day. Household 1 uses a constant amount of electricity throughout the whole day. However, household 2 only uses a small amount of electricity during most of the day, but in the evening (4pm – 9pm) turns on a number of appliances and therefore uses a lot of their total 24kWhs consumption in that shorter period. Because household 2 uses a lot of electricity during that 4pm – 9pm period, that will mean that household 2 will have a high maximum demand recorded on that day.
- Your meter calculates electricity demand as an average across a 30-minute interval, not the single highest instantaneous demand during those 30 minutes. A simple way to calculate demand over a 30-minute period is to multiply the kWh consumption by 2. For example, if all your appliances in your home used say 1.5kWh in 30-minute period, the demand would be calculated as 2 X 1.5kWh = 3kW.
What does this all mean for me as a residential customer?
If you are on a standard flat rate electricity tariff now, and your meter is being changed to or is already a smart meter, some electricity retailers may at some point require you to move to one of the new types of electricity tariffs.
To be clear – this is a choice of each retailer – some retailers will continue to offer flat rate tariffs for their customers, regardless of the type of meter.
Any such tariff change, if it happens, would generally apply to your primary tariff only – all homes have a primary tariff, which is the main tariff used for most of your light and power circuits.
If you have a secondary tariff (the tariff that may have things like hot water systems and pool pumps connected) you should be able to keep this tariff when moving to a new primary tariff (but check with your electricity retailer if they offer a secondary tariff with your primary tariff).
When might my electricity retailer move me to the new tariffs?
When this might happen is impacted by two key factors:
- When your meter is replaced or upgraded to a smart meter
- How your electricity retailer develops their retail tariffs, including if they reflect the network tariffs into their retail tariffs they offer to you.
Smart meters are the standard type of meter now installed in new homes, as well as other situations including:
- when a new solar power system is installed
- when the existing electricity meter requires replacement (due to failure)
- or when you choose to move to a demand or time of use tariff.
Older style meters that do not have this capability are referred to as ‘basic Type 6 meters’. Visit the Queensland Government's Digital meters website for more information about the requirements for electricity metering in Queensland.
The new network electricity tariffs require a smart meter that can record energy consumption in 30-minute intervals and provide that data to your electricity retailer (usually via a 4G connection), instead of being read each quarter by a meter reader coming your house.
So when you have a smart meter installed, we'll apply the default network tariff called the Residential Transitional Demand Tariff (see table below) to your premises. Therefore, your electricity retailer may move you* to one of their retail demand tariffs.
However, a time of use energy network tariff is also available. You may wish check with your retailer if they offer a retail time of use energy tariff, if you think a demand-based tariff is not suitable for your household.
* Note: Not all electricity retailers will move you to a new demand or time of use tariff. Some retailers may allow their customers with a smart meter to remain on a flat rate tariff. Be sure to check with your retailer.
The rates and structures of tariffs that electricity retailers offer to their customers is ultimately decided by each retailer.
Whilst network tariffs charged to electricity retailers have been moving to demand and time of use-based tariffs (from 1 July 2021 for customers with a smart meter), electricity retailers can choose when or if they pass on to their customers tariffs that have charges based on demand and/or time of use.
Some retailers may continue to offer flat rate tariff structures or other innovative price structures, products and services.
Please ensure you talk to your electricity retailer to understand your tariff options.
Note: Under the network tariff rules approved by the Australian Energy Regulator, when a residential premises has a smart meter installed, the network tariff applied to that premises can no longer be the flat rate tariff (see table below). It is not possible for the network tariff to be changed back to the flat rate tariff - it is up to your electricity retailer which tariffs they offer to their customers with smart meters.
Tips to save on your power bills
Visit our Managing your power bill web page to read more about:
- how to access your previous electricity consumption history
- whether a demand or time of use tariff might be best suited to you
- and how you can adjust to either of these tariff types to save on your bill.
If you move to a time of use energy or time of use demand tariff, we’ve compiled some tips and hints to help you understand the ways to manage your electricity use in your home, to help you save on your power bills.
What are the residential network tariff options?
Customers are billed based on their retail tariffs and so you should always check with your retailer regarding their tariff options
We are required to publish full details on the residential and business tariffs in our network pricing guide and below is a high level summary of our residential network tariffs.
| Tariff type | Tariff name | Fixed daily charge | Consumption (kWh) charge | Demand (kW) charge | Key eligibility criteria |
|---|---|---|---|---|---|
| Primary tariffs | Residential inclining Block | Yes ($/day) | Yes ($/kWh)1 | No | Only for customers with an older style basic meter - not a smart meter |
| Residential Transitional Demand2 | Yes ($/day) | Yes – flat rate charge ($/kWh) | Yes – monthly charge, in $/kW/month, based highest demand between 4pm to 9pm weekdays and weekends. |
Must have smart meter. Where customers changing from an older style basic meter to a smart meter due to a meter failure, they must move to this network tariff after 12 months. | |
| Residential Demand2 | Yes ($/day) | Yes – flat rate charge ($/kWh) | Yes – monthly charge, in $/kW/month, based highest demand between 4pm to 9pm weekdays and weekends. | Must have smart meter. | |
| Residential Time of Use (ToU) Energy | Yes ($/day) | Yes, charges based when electricity is used
| No | Must have smart meter. | |
| Secondary tariffs | Volume Controlled / Economy | No | Yes – flat rate charge ($/kWh) | No | Must be used in conjunction with one of the above primary tariffs. |
| Volume Night Controlled Night / Super Economy | No | Yes – flat rate charge ($/kWh) | No | Must be used in conjunction with one of the above primary tariffs. |
Need more information on which network tariff is best for you?
We hope the above information has explained how network tariffs work and you now have a better idea of your tariff options to be able to discuss with your electricity retailer.
We understand that many consumers can find tariffs complicated – if you have more questions, you can email us at residentialtariffs@energyq.com.au and we’ll do our best to help you. But remember that as retail electricity tariffs vary across retailers, they are the best to provide advice on tariff options and any personalised tariff advice for you.
For more tariff information, visit our Pricing & tariffs web page.
Footnotes
- At applicable variable rates.
- The difference between the Residential Transitional Demand and the Residential Demand tariff is that the Residential Transitional Demand tariff is intended to be an introductory demand tariff which incorporates a lower demand price compared to the Residential Demand tariff. This tariff allows residential customers to adjust to the concept of demand they may not be familiar with.