Electricity Tariffs
Find out all about electricity tariffs and which ones may work to help you keep your power bills low.
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Electricity prices in Australia are skyrocketing. So what can you do to minimise your power bills? By understanding electricity tariffs you can choose an energy plan that best fits your pattern of electricity use. Find out all about electricity tariffs here with Savvy so you can choose the cheapest plan for your household or business.
What are electricity tariffs, and how do they work?
Electricity tariffs are the pricing structures set by energy retailers that determine how you are billed for your electricity usage. It's important to understand how electricity tariffs work, as they can have a big impact on your energy bills. They are expressed in cents per kilowatt hour (c/kWh) of electricity. Here's a few of the most common tariffs you’ll find offered in Australia:
- Flat-rate tariff: Also known as a standard tariff, this type of tariff charges a flat rate for the electricity you use, regardless of the time of day or season that you use it. This type of tariff doesn't take into account variations in the demand for power in the energy grid.
- Time-of-use (TOU) tariff: TOU tariffs have different rates depending on the time of day. Peak periods, when electricity demand is high, have higher rates, while off-peak periods have lower rates. The time of day in between peak and off-peak rates are referred to as the ‘shoulder’ period. TOU tariffs encourage people to shift their energy usage to times when there is less demand on the energy grid, by offering lower rates when demand is low.
- Demand tariff: This tariff considers both your total energy consumption, and the highest amount of electricity you used during a specific period, measured in 30-minute blocks. Therefore, if you turn on a number of power-hungry appliances all at once within a 30-minute period, your demand tariff may go up.
- Feed-in tariff: Also known as a buy-back rate, this is the amount you get paid when you generate excess electricity with your solar panels, and feed it back into the electricity grid. A feed-in tariffs allows you to sell your surplus energy back to the grid at a predetermined rate. It is also measured in cents per kilowatt hour (c/kWh.)
All these tariffs (except the flat rate tariff) require a smart electricity meter to measure not only how much electricity you use, but when you use it, too. Therefore, if you don’t have a smart meter, you will only be able to have an energy plan that uses a flat rate tariff.
Tariffs vary considerably amongst electricity retailers, so it's important to compare your options and choose the one that suits your particular energy use pattern. By understanding tariff structures and actively managing your energy usage, you can potentially reduce your electricity bills.
How can I reduce my electricity bills by using different tariffs?
You can potentially save a considerable amount on your electricity bills by understanding different electricity tariffs, and then using them to your advantage. However, to be able to take advantage of cheaper tariff rates you’ll need a smart meter, and an electricity plan that includes a time-of-use or demand tariff. Here’s what to do first:
First steps towards taking charge of your electricity consumption:
- Check that you do have a smart meter that measures your power usage on an ongoing real-time basis. Smart meters generally have a digital face with a number of panels that represent your current electricity consumption, and overall consumption. If you do have a solar panel system installed, you will certainly have a smart meter.
- If you don’t have a smart meter, you may be able to request one is installed. Talk to your electricity distributor to find out about the availability of smart meters in your area.
- Look at your latest power bill and see if you are on a time-of-use or demand tariff. Details of the tariffs which apply to your particular plan should be on your electricity bill.
Make your electricity tariffs work for you
Once you’ve established that a time-of-use tariff or demand tariff does apply to you, it’s time to start shifting your electricity use to take advantage of cheaper charging periods. Here are some practical strategies to make the most of time-of-use tariffs and optimise your energy usage:
Understand different rate periods:
Familiarise yourself with the rate periods of your time-of-use tariff, including peak, off-peak, and shoulder periods. Peak periods have the highest rates, off-peak periods have the lowest rates, and shoulder periods fall in between. Peak periods are often in the evenings, whereas off-peak periods are often at night and at weekends. Check with your retailer when your peak periods begin and end, as these will vary between retailers and states.
Shift energy-intensive tasks to a cheaper time:
Identify your activities that use a lot of electricity, such as running the dishwasher or washing machine, heating water, or filtering and heating your pool. Re-schedule these tasks to run during off-peak periods when electricity rates are lower. Shifting your energy consumption to off-peak times can significantly reduce your electricity bills.
Use the delayed start feature on your appliances:
Take advantage of delayed start settings on appliances like washing machines, dishwashers, water heaters and pool appliances. Set them to begin their cycles during off-peak periods, so they consume electricity when tariff rates are lower. This may involve loading up your washing machine or dishwasher before you go to bed, and then setting a delayed start so they turn on during the night when you’re asleep and electricity rates are at their lowest. Swimming pool filters and heaters may need to be re-set individually, using their built-in on/off timers
Time your charging-up of devices:
If you have an electric vehicle, or rechargeable devices such as tablets and laptops or battery-operated tools or vacuums, recharge them during the night at off-peak periods. This may involve setting a timer to turn on the power to your charging device. However, such timers are cheap to buy from hardware stores.
Use smart energy monitoring:
Install a smart energy monitoring system connected to your phone to track your electricity usage in real-time. Monitoring systems are now available which offer the opportunity to keep an eye on your power generation and usage using a phone app. Many solar panel systems now come with such energy monitoring apps as standard. Such apps help you identify peak usage times and make informed decisions about adjusting your energy habits accordingly.
By comparing electricity plans using Savvy’s free comparison service, you may be able to find a new plan that has cheaper tariffs or a lower supply charge per day, and so save money on your power bills.
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Disclaimer:
Savvy is partnered with Econnex Comparison (CIMET Sales Pty Ltd, ABN 72 620 395 726) to provide readers with a variety of energy plans to compare. We do not compare all retailers in the market, or all plans offered by all retailers. Savvy earns a commission from Econnex each time a customer buys an energy plan via our website. We don’t arrange for products to be purchased directly, as all purchases are conducted via Econnex.
Any advice presented above is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an energy plan. For further information on the variety of energy plans compared by Econnex, or how their business works, you can visit their website.