Understanding Energy Tariffs: A Complete Guide

When you use electricity or gas at home or at work, the way you pay for it is determined by a tariff. A tariff is simply the structure used to set your energy rates. Your tariff can vary depending on your meter type, your energy distributor, and how and when you use energy. Understanding your tariff helps you make sense of your energy bill and can even help you save money.

This guide explains the main types of electricity and gas tariffs, so you can better understand what makes up your energy bill.

Electricity Tariffs Explained

Electricity tariffs typically have two main components:

1. Supply charge — A daily fee for being connected to the electricity network, even if you don’t use any energy that day.

2. Usage charges — The cost of the electricity you actually use, measured in kilowatt hours (kWh).

Depending on your distributor and meter setup, your electricity usage charges may follow one or more of the following tariff types:

Single Rate Tariff

With a single rate tariff, you pay the same rate for electricity no matter what time of day you use it. This is simple, predictable, and easy to understand.

Time of Use Tariff

1. A time-of-use (TOU) tariff means your electricity rates change depending on the time of day. This reflects fluctuations in demand on the energy grid:
2. Peak times: These are periods of high electricity demand, such as weekday evenings. Rates are highest during these hours.
3. Off-peak times: These are periods of low demand, often overnight or when solar energy generation is high. Rates are lowest during these hours.

TOU tariffs encourage users to shift electricity use to off-peak times, helping to reduce costs.

Demand Tariffs

Demand tariffs are based on your peak electricity usage. If you have a smart meter, your demand charge is calculated using your highest 30-minute kW reading on any workday, multiplied by the number of days in the billing period.

The higher your peak usage, the higher the demand charge. This tariff works well for households or businesses that can avoid using multiple high-energy appliances at the same time.

Solar Feed-In Tariff

If you have solar panels, any extra electricity your system sends back to the grid can earn you a feed-in credit on your bill. The feed-in tariff rate depends on your state and your energy plan.

Gas Tariffs Explained

Like electricity, gas tariffs also include a supply charge and usage charges. Usage is measured in megajoules (MJ). How your gas rates are structured can vary by state:

Seasonal Gas Tariffs (Victoria Only)

1. Winter rates: Usage rates are higher due to increased demand.
2. Non-winter rates: Usage rates are lower when demand is lower.

Non-Seasonal Gas Tariffs

In other states, gas usage rates usually remain the same all year round.

Why Do Tariffs Change?

Energy tariffs can change for several reasons:

1. Your distributor changes their network tariff.
2. You upgrade your meter or change your energy usage patterns.
3. Your energy provider simplifies tariffs to make bills clearer.
4. If your tariff changes, your provider will always notify you in advance.

How to Check Your Tariff

You can find your tariff on your energy bill or by contacting your energy provider’s customer service team. Your bill will show:

1. Your supply charge
2. Your usage charges
3. The type of tariff you are on

Knowing your tariff type helps you understand your energy costs and can guide you in making smarter choices for energy usage.

Summary: Understanding your energy tariff — whether it’s electricity or gas — helps you make sense of your bills and identify ways to save. From single rate and time-of-use electricity tariffs to seasonal and non-seasonal gas tariffs, knowing what you pay for and when is the first step to better energy management.

Read more here: Understanding Energy Tariffs | Sumo — Electricity & Gas 

https://www.sumo.com.au/understanding-energy-tariffs