What Is a Demand Tariff?
What Is a Demand Tariff?
Compare Electricity & Gas Plans
Save time and effort by comparing a range of energy plans with iSelect
Regular tariffs versus demand tariffs
On your regular tariffs, like flat rates or time of use, you’re paying for how much electricity you use. The demand tariff takes things to the next level by charging based on how intensely you’re using electricity, like having multiple appliances running at once. Essentially, it’s a charge for the demand you place on the grid, particularly at peak usage times.
The idea behind it is twofold: support a grid that can handle more demand while getting everybody using electricity more consistently.
Demand tariffs can take a few different shapes though. For instance, your Electricity Retailer might charge you a daily rate using your highest demand in the year, month or peak period. Alternatively, your demand charge might be based off your average demand, rather than just the most intense day when you forgot to turn the air con off. You may even have different demand charge rates based on different seasons.
Different peak demands across one month
Your daily demand during peak windows may not change much or you might see spikes throughout the month. The below graph gives you an idea of how demand charges look for different people.
How do demand tariffs work?
On your typical electricity bill, you’ll find two types of charges: supply and usage. Supply is a fixed daily rate for keeping your place connected to the grid. Usage is, as you might have guessed, a rate for how much electricity you’ve used. With demand tariffs in play, you’ll then see a demand charge also listed.
How you use electricity in peak demand windows, like between 5:00pm and 9:00pm, affects your demand charge. For instance, if you were to get home from work, turn on the air conditioner, start up the oven and chuck on an episode of Netflix while you have a shower then blow-dry your hair, this could be your peak demand usage that gets applied to your bill. Even if you reduce your electricity usage later during that peak demand window, you could still see a spike in your demand charge.
Therefore, you could be better off taking things slow and using only one or two appliances with good energy ratings at any given time.
FYI: your peak demand window is something that your retailer will make a call on, or even your distributor. It can also shift depending on the season, like between summer and autumn as the aircon goes off and the jumpers come out.
Will my Electricity Plan come with a demand tariff?
As you’re comparing Electricity Plans, you may find that some come with demand tariffs. Additionally, your distributor (not your retailer) may even make the call and put you on one. You also can put your hand up and ask to join the demand tariff bandwagon. In the same vein, you can generally ask to opt out of demand tariffs if they’re just not your thing.
Whichever side of the fence you sit on when it comes to demand tariffs, be aware that you’ll need a smart meter to make it all work.
Can I save money with a demand tariff?
A demand tariff is never just going to pop a discount onto your electricity bill — no tariff does. But you could find that it helps you save money in a couple of different ways, like:
- Swapping to lower supply and usage charges: depending on your Electricity Plan, you might see your demand tariff combined with overall lower supply and usage charges, helping drop your bill
- Teaching you about your electricity habits: demand charges may be the first incentive for you to think about how much electricity you use and when, prompting you to save electricity
Where can I find and compare Electricity Plans?
If a demand tariff sounds right up your alley or you’d rather give them a miss, iSelect can help you compare a range of Electricity Plans from different providers. For an easy DIY-approach, you can use our online comparison tool or, for the human touch, you can call our Australia-based Energy comparison experts on 13 19 20.