Let’s simplify electricity tariffs so you can understand how energy is billed.
All you need to do is:
- understand how peak and off-peak periods work;
- understand the four main types of electricity tariffs and which is available to you; and
- if possible, alter your consumption of energy around your specific tariff type.
What is peak and off-peak electricity?
In the energy sector, peak, off-peak and shoulder periods refer to times of day, or days of the week, where energy consumption varies based on demand. In peak periods, retailers charge a higher rate. In off-peak periods, they charge a lower rate. The shoulder period typically sits somewhere in the middle.
- Peak. Usually during the evening and pre-work/school-run rush in the morning when nine-to-fivers are home.
- Shoulder. The times between peak and off-peak.
- Off-peak. Generally late at night and early in the morning, or on weekends, when businesses are shut and most people are asleep.
What are off-peak times?
Off-peak electricity is generally the time of the day when electricity is charged at a lower rate. Check your retailer for specific peak/off-peak/shoulder periods. Off-peak and shoulder will vary between retailers, distribution networks and states. Also, shoulder periods are not available in some states.
Whether you pay peak or off-peak rates depends on your electricity tariff
What is an electricity tariff?
Your tariff determines how you get charged for electricity usage. Generally, you don’t choose your electricity tariff, as it’s already determined by the wiring of your home and meter type.
Here are four common types of electricity tariffs in Australia:
- Single rate tariff. Also known as a peak only or standard rate, a single rate tariff is a flat rate with no off-peak periods. Typically, the most common tariff where customers are charged the same rate regardless if it’s day or night.
- Time of use tariff. This tariff is where peak, off-peak and shoulder (in most states) enters the game. Like a train ticket, you’re charged different prices at different parts of the day or day of the week. Retailers set the times that constitute these periods.
- Controlled load tariff. Often called a ‘dedicated circuit’, this tariff only applies to large electrical appliances like an electric hot water service, floor heating or running a pool pump. Controlled load tariffs are usually cheaper because the appliances can run at off-peak times.
- Demand tariffs. An extra charge on top of usage and supply charges, a demand tariff accounts for how intensely you use electricity in a given period. A tariff for heavy users, it encourages people to use their appliances during off-peak times. Retailers calculate demand charges differently. For example, some charge based on the highest usage in a period of time while others charge an average of peak usage over a set timeframe.
N.B. For solar customers, there’s the solar feed-in tariff which actually pays you for excess electricity to put back into the grid.
When is the cheapest time of the day to use electricity?
If you have a smart meter, then off-peak periods offer the cheapest rates. However, you can only access these rates on a time of use tariff – it generally suits people who predominately use electricity during the day or very late at night.
Provided you have a smart meter and your electricity retailer offers a time of use tariff, you can switch over. If you don’t have a smart metre, there may be installation costs included. Although, there are instances where the government or provider foot the bill.
What is a smart meter?
In certain circumstances your retailer may offer you an energy plan that requires a meter to be installed. A smart meter is a power-monitoring device that replaces traditional electricity meters and provides you (and your energy retailer) with insight into your energy usage. Smart meters record and send energy usage information data in half-hourly blocks to your energy provider to measure the amount of electricity you use.
Is it cheaper to use electricity at night?
It depends on your tariff and exact time period. If you’re on a time of use tariff, peak time is usually at night, for example, between 2pm-8pm. You’ll need to check your peak time as it changes by provider and state. Alternatively, if you’re on a single rate tariff, then it doesn’t matter because you pay the same rate 24/7.
Learn more about how to read you’re electricity or gas bill with our handy explainer.
How to reduce your electricity bill
While you’re at it, you should try and reduce your energy bill, here are three ways:
- Reduce usage. Learn more about how to save electricity.
- Track usage. Make a conscious effort to track your energy usage and alter your consumption behaviours.
- Compare providers. The price you pay for electricity varies from retailer to retailer, that’s why we help you compare.
Time to compare energy plans
Why compare? Well, it’s an easy process that could potentially save you money.
Just enter a few details, then choose from a list of options. Not sure which plan to choose? Don’t worry; when you compare, we’ll explain rates, tariffs, features and more.
Finally, if you decide to switch, it won’t interrupt your supply and we’ll handle the paperwork. It’s just another way we make comparing energy simple.
So, what are you waiting for? Compare energy plans today!