Written by Tiana Lee-Collins
Reviewed by Meredith O’Brien
Last updated 09/10/2023
If you’re interested in comparing electricity plans, understanding electricity tariffs and how they work can help you choose a suitable plan. If you’re considering changing your tariff or switching energy plans, make sure you understand the following:
When it comes to choosing a suitable electricity plan for your electricity needs, our Head of Energy, Meredith O’Brien, has some tips for you.
Remember to add your bill details if you want to see your actual usage when comparing estimated costs. This will give you a better idea of what you’re likely to pay for electricity and recalculate the estimate based on your actual tariffs.
If you’re eligible, you’ll need to contact your retailer to discuss your options. Switching to a smart meter may allow you to take advantage of a time of use tariff and better manage your usage by spreading your non-essential energy usage from peak demand times to off-peak times. Time of use tariffs are particularly useful to those who work from home.
If you have solar panels, maximise your solar usage by using energy-heavy appliances during the day (e.g. washing and drying clothes, running the pool pump and using the dishwasher during daylight hours).
Your tariff(s) determines how you’re charged for electricity usage. Generally, your electricity tariff is determined by the wiring of your home and meter type. The Australian Energy Regulator (AER) or the Essential Services Commission in Victoria will review and approve tariffs each year to ensure that customers aren’t paying excessive electricity prices.
Here are four common types of electricity tariffs in Australia:
If you have solar panels, there is also the solar feed-in tariff, where the excess electricity your system generates and feeds back into the grid is credited to your bill. However, feed-in tariffs are decided by individual retailers and rates can vary, except in Victoria (VIC) where the Essential Services Commission sets an annual minimum tariff, effective from 1 July. Keep in mind, some retailers may also have a daily solar metering charge.
In the energy sector, peak, off-peak and shoulder periods refer to the time of day, or days of the week, where energy consumption varies based on demand. Peak and off-peak electricity is only relevant for time of use or flexible pricing tariffs.
In peak periods, electricity retailers charge a higher rate. In off-peak periods, they charge a lower rate. The shoulder period typically sits somewhere in the middle.
If you’re on a time of use tariff, the cost of your usage will depend on the time of your electricity use. You could even be charged different rates depending on the season; winter and summer are considered peak by some distributors and retailers, while spring and autumn may be off-peak. Your retailer bills you on your electricity use in cents per kilowatt hour (kWh), as seen on your electricity bill.
Learn more about how to read your electricity or gas bill with our handy explainer.
A smart meter is a power-monitoring device that replaces traditional electricity meters and provides you (and your energy retailer) with detailed insight into your energy usage. In certain circumstances, your retailer may offer you an energy plan that requires a meter to be installed.
Smart meters record and send energy usage data in half-hourly blocks to your energy retailer to measure the amount of electricity you use.
If you have a smart meter, off-peak periods offer the cheapest rates. However, you can only access these rates on a time of use tariff, so this generally suits people who predominately use electricity during the day or very late at night.
You’ll need to check your peak and off-peak times as it changes between distribution zones and even states. If you’re on a single rate tariff, it doesn’t matter what time you use electricity because you pay the same rate 24/7.
Provided you have a smart meter and your electricity retailer offers a time of use tariff, you can switch over if you want to take advantage of cheaper, off-peak rates. If you don’t have a smart meter, installation costs may be included, although there are instances where the government or retailer may foot the bill.
In Australia, we have a combination of regulated and deregulated states for electricity. Most states have deregulated energy markets to some degree. In Western Australia (WA), the Northern Territory (NT) and regional and north Queensland (QLD), electricity tariffs are still regulated, meaning the government controls and manages the tariff prices.
In South Australia (SA), South East QLD, New South Wales (NSW) and the ACT, electricity tariffs are all deregulated, meaning you’re able to compare plans and retailers! However, these states do have a government-regulated Default Market Offer (DMO), which is the maximum price energy retailers can charge residents and small businesses on a default plan or standing offer. Tasmania (TAS) is also a deregulated state, but choices for retailers are extremely limited.
Victorian electricity tariffs are unique by having their own type of standing offer, known as the Victorian Default Offer (VDO). This safeguards VIC residential customers and small businesses by providing a reasonably priced option for those who don’t want to delve into the energy market. Similarly, the Essential Services Commission sets an annual minimum solar feed-in tariff for customers. VIC also has two types of time of use tariffs (known as peak and off-peak and the flexible pricing tariff) that can be offered by electricity retailers.
No matter the type of tariff you have, there are still things you can do to try and reduce your energy bill. Here are three simple ways:
