Types of energy contracts

There are three types of energy contracts in Australia: standard retail, market, and government regulated.

Standard retail contracts typically cost more than market contracts, and energy prices (or ‘rates’) can still change with little warning – but the retailer can only change rates a certain number of times in a year.

Market contracts may cost less than standard retail contracts and include discounts, but rates can change at any time – even shortly after you’ve signed up.

Government regulated contract means energy prices are set by the government, not the retailer – although the retailer can provide input.

Keep in mind that the government still sets energy rates in Western Australia, Tasmania, regional Queensland and the Northern Territory. Before you start searching, check that your preferred type of energy contract is available in your part of Australia.

What are energy tariffs?

A ‘tariff’ is the price you’re charged for using energy under your contract. The energy distributor in your home state sets the tariff structures.

Tariffs typically consist of two parts:

  • Fixed charge. Often called the ‘service charge’ or ‘daily supply charge’, the fixed charge is separately shown as a daily rate on your bill. It is charged regardless of how much energy your business uses.
  • Variable charge. This is how much your business pays for each unit of electricity or gas. The variable charge can be listed on your bill as cents per kilowatt hour (c/kWh) for electricity and cents per megajoule (c/MJ) for gas. This charge is also called the ‘consumption charge’.

You can find the fixed and variable charges that make up the tariff on your electricity or gas bill.

It is also worth noting that tariffs depend on the type of meter you have at your premises, and different variable charges can apply depending on how much energy your business uses.

What electricity tariff am I on?

There are several types of electricity tariffs in Australia:

  • Single rate. This tariff stays the same for peak (the time of day/year that sees the highest energy use) or off-peak (usage rates stay the same regardless of the time of day/year) periods. Single rate tariffs are also called ‘flat rate’ or ‘standard rate’.
  • Time of use. A tariff that has different rates for different times of day – respectively, highest for peak time and lowest for off-peak time. Energy providers in some Australian states include ‘shoulder rates’ in this tariff between peak and off-peak periods.
  • Controlled load. A lower rate applied during off-peak hours – usually overnight.
  • Solar feed-in tariff (FIT). A payment that your electricity retailer credits to your account for the excess electricity generated by your solar panel system and fed back into the grid. This tariff is applied on top of other usage tariffs.

I’m a business gas customer. What’s my tariff?

Energy distributors regulate gas prices in most Australian states and territories (apart from Western Australia, Tasmania, regional Queensland and the Northern Territory). Most business gas offers usually include single rate tariffs – meaning usage rates stay the same regardless of the time of day or year.

However, distributors may offer seasonal rate tariffs in some states. A seasonal rate tariff means your usage rates increase during peak season (i.e. winter). Specific dates for these tariffs vary between distributors and states.

How do I choose the right tariff?

  • Work out how much energy your business uses. One of the ways to do this is installing a smart meter. This device can help you better understand your energy usage, so you can budget more accurately and eventually reduce your bill.
  • Move to a less expensive tariff. Energy tariffs can change during a billing period. Some providers can move your business to a lower-priced seasonal rate or time of use tariff.
  • Compare various energy providers. There is little reason for you to stay loyal to your provider if you can track down a plan where you’ll be paying less on your energy bill.

I want to get out of my contract. Will I have to pay a fee?

You might have to pay a cancellation fee if you choose to leave your contract. This cost is also called an ‘exit fee’ or ‘early termination fee’. Check your contract terms and conditions to see whether the cancellation fee applies to you.

I want to connect my business. What do I need to do?

You’ll need to advise your energy provider about the date you want to be connected on, and they’ll work with the distributor to arrange the connection at your business premises.

If you want to sign up to a new business energy deal or switch to a plan that fits better, you can easily do so with our energy comparison service. It will only take a few minutes to access a range of quotes from Australia’s leading energy providers.

Do you have more questions about energy tariffs? Or want to find out more about business energy contracts available in your area? Simply call us on 1300 798 697, and one of our experts will help you with your query.