Better energy

A guide to understanding ‘demand tariff’ charging

DT

1st of August 2024

We’ve recently been answering some questions from customers about whether the use of 

‘demand tariff charging’ has been a factor in higher-than-expected energy bills for some people. With cost-of-living pressures now facing many Australians, we wanted to shine a light on what demand tariffs are and some useful things everyone can do to take control of their energy bills. 

What is a demand tariff and how is it different from a usage charge? 

A usage charge is calculated on the total kilowatt hours (kWh) used in a billing period. A demand tariff charge is different from that in one important way – it is calculated on a household’s highest usage over a 15 or 30 minute period (depending on your type of meter) in a calendar month. 

Demand tariffs can also vary with the seasons. They may be higher in summer when there’s more demand for air conditioners or in winter when more of us turn-up the heaters. 

Demand tariffs were introduced through a consultation between energy distributors and some state and federal governments beginning in 2016. They were designed to make energy pricing fairer for all by charging customers who use the most electricity during peak times more than customers who don’t. 

It’s all about encouraging people to shift their usage to times when the demand isn’t so high. Let’s look at some things that can be done to make the shift easy. 

Tips for monitoring and managing demand tariff charges 

  1. Stagger when you use appliances 

Don’t run two or more appliances at the same time. For example, use the dishwasher 

after the washing machine has finished its cycle. 

  1. Smart plugs and timers 

Not only can they help stagger appliance use, they can also be used to switch off stand 

-by power in unused appliances. 

  1. Invest in energy-efficient appliances 

This is all about swapping old appliances when they die with higher energy efficiency 

rating replacements that use less power.  It can help reduce peak demand usage. 

  1. Keep large appliances well maintained 

Regular maintenance like cleaning refrigerator coils or servicing heating, ventilation 

and air conditioning appliances can promote ongoing operating efficiency. 

  1. Keep it simple 

Alternatives like air-drying clothes, using cold water wash cycles, and turning off lights 

and electronics when not in use are a simple way to make a positive change. 

By understanding how demand tariff charges work you can take control of your energy costs and contribute to a more stable and efficient energy grid. If you don’t believe that being on a demand tariff plan is right for you, or you’d like us to review the best plan for your needs, simply call us on 133 466 (Monday to Friday, 8.00am to 9.00pm AEST/AEDT). Or visit our website to compare plans.