Electricity Tariffs in Australia: What You Need to Know

Electricity is a necessity, and we all want to get the best price possible on our monthly bills. Understanding its pricing can help you compare electricity rates effectively and save money on your electricity bill each month.

Let’s explore the different types of electricity tariffs available in Australia and how they work.

This way, you can make an informed decision about which tariff option is right for you and your family!

What is an electricity tariff?

Tariffs are introductory rates for your electricity. The electricity bill has two components: standing charge and variable costs.

The standing charge covers meter reading and administration costs, regardless of how much or how often you use electricity.

The variable cost part is based on how much you use several different tariffs – and depends on what the company charges you at any time (which can change).

Understanding these tariff options can help you decide which option offers the best price for your needs.

The tariff options include:

– Time of Use (TOU)

– Tiered pricing

– Regulated Price Plan (RPP)

– Global adjustment

Each of these offers a different method for charging you during your monthly billing cycle.

Let’s take a closer look at each one to see how they work!

Electricity tariff types

Time of Use (TOU)

TOU is the most common type of electricity tariff in which prices change depending on when you use it.

There are different peak times and off-peak times throughout the day when electricity is more expensive to produce.

So your cost per kWh will be higher at certain hours of the day than others – also known as ‘time of use’ (TOU).

Peak times for TOU tariffs are usually in the evenings, after work, or on the weekends.

Off-peak times are usually in the early morning, overnight hours, and during the day at the weekend. These times generally have lower prices per kWh of electricity to encourage you to use it when demand is low.

As you compare electricity rates, it’s a good idea to look into your energy usage patterns.

It’s best to determine which time slots align with your schedule and the times you generally use electricity. This will help ensure that you’re using energy when it is cheapest to do so at a time of day!

Tiered pricing

With tiered pricing, as with TOU rates, prices per kWh increase as your level of consumption increases; however, they also have flat rates for lower levels of consumption.

An off-peak tariff is a suitable option if you primarily use electricity in the evenings and overnight when prices are generally lower.

Why should you pay more than you have to?

With tiered pricing, your monthly bill is broken down into different levels: base rate (the lowest level), mid-rate, and high-rate.

With every tier increment, the higher your price per kWh becomes.

Each level of consumption has a flat fee associated with it that does not change for any amount of electricity usage within that tier. This means no matter how much you use in each interval, if you stay under your monthly allowance at one rate, then you won’t be charged extra!

Regulated Price Plan (RPP)

RPP is also known as the ‘Guaranteed Energy Supply Rate’.

This plan offers customers a price per kWh that will not change throughout your billing cycle.

The rate you pay with an RPP tariff stays constant, but it is still a time of use tariff.

So basically, this option will charge you the same rate each month regardless of your billing cycle.

But with RPP plans, there are two peak times in which prices per kWh are higher than off-peak rates. These peak times usually coincide with TOU peak hours and generally occur in the evenings or on weekends, just like what happens under a TOU plan.

The benefit of an RPP plan is that you will pay a flat fee for your electricity usage up to the amount it falls under one of these peak times – no matter how much energy you use!