Electricity rates, also known as tariffs, are used to calculate your energy bills and are made up of both usage rates and supply charges.
- Supply charge is a fixed daily service charge to supply energy to your address, it is also known as a daily charge.
- Usage charges are rates charged for the energy you use. You can be charged on a single tariff (flat rate) or have different usage rates depending on the time of day and day of the week you use energy, these are called Time of Use (TOU) rates.
- Demand tariffs or demand charges, are billed based on your highest demand for electricity in kilowatts (kW) during a 30 minute interval. They’ve been designed to encourage less electricity use during peak demand times when there’s more pressure on the grid. These charges usually apply to larger business customers.
- Flat rates are a single rate charged for all electricity regardless of the time of usage.
- Time of Use (TOU) rates are divided in to Peak, Offpeak and sometimes Shoulder reads that apply to usage dependent on the time of day and day of the week. The TOU definitions for each rate are set out by the distributor.
- Peak rate is the most expensive TOU rate and is charged when electricity demand is highest, usually within standard business hours
- Offpeak rate is the cheapest rate and usually applies to times when there is less demand on the grid to encourage more use of power over this period than in peak times.
- Shoulder rate is between peak and offpeak in both timing and price.
- Tiered rates include different prices for different thresholds of usage, the amount under the first threshold is generally cheapest, and then when a threshold of total usage is passed, electricity becomes more expensive. These rates are designed to incentivise lowering usage.