Energy bills can be overwhelming with all the different charges and tariffs. It’s easy to just focus on the total amount due, but by taking the time to understand your bill you can uncover some money-saving opportunities. Let’s dive into this in more detail and guide you in identifying those opportunities.
What are network tariffs?
As a consumer, it’s important to understand that network tariffs make up a significant portion of your monthly electricity bill and can have a big impact on your home or business budget. Despite not being directly charged by network operators, you indirectly pay for the costs associated with supplying and maintaining the infrastructure that delivers electricity to your home or business. These costs are passed on to your electricity retailer, who then charges you through network tariffs. The good news is that as network operators continue to invest in improving these poles and wires, you can expect a more reliable and efficient electricity supply. As a confident and knowledgeable consumer, understanding these network tariffs is essential in taking control of your monthly energy bills.
Who sets the network tariffs?
The Australian Energy Regulatory (AER) mandates electricity distributors to provide yearly pricing proposals. Since 2017, the AER has been responsible for assessing network tariff proposals from distribution companies and determining whether they can be implemented for the subsequent regulatory year. Accordingly, the AER approves tariffs based on data provided by network providers, resulting in possible rate changes.
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What are the different network charges for electricity?
As a consumer, you might be unaware of the different charges that electricity companies impose to utilise their network. However, it’s crucial that you’re aware of the tariff structure of your business to ensure that you’re getting the best value for your money. Let’s break down the various network charges to help you make an informed decision.
Daily Charge
This tariff structure is the most simple one and involves a fixed charge per day to each electricity connection point where demand is recorded.
Usage Charge
A usage charge can be calculated on a flat or variable charge. It is calculated on a cent per kilowatt-hour basis for energy consumed at a connection point. This can either be:
- Flat Volume Charge
A flat or single-volume charge means that the user is charged according to the volume of electricity consumed, regardless of the time of day it is used.
- Time of Use (ToU) Volume Charge
Time of Use charges, also known as variable volume charges, vary based on different times of the day. The electricity rates are lower during off-peak overnight hours, while they increase during peak evening hours when demand is higher. Daytime rates, known as “shoulder” periods, fall between peak and off-peak hours.
These charges are designed to motivate consumers to shift their non-essential electricity consumption to times of lower demand when the rate is cheaper. This can save money while using electricity more efficiently.
How do I get assigned a network tariff?
Household and Small to Medium Enterprise (SME) bills bundle network charges into generalised rates like Peak, Shoulder, and Off-Peak charges. Meanwhile, larger Commercial and Industrial (C&I) customers receive unbundled bills that itemise network charges.
Customers’ individual circumstances are taken into account when assigning a network tariff, these include:
- Location – This determines which network a customer is on.
- Customer/User type – Residential, Small business (SME), Large business (C&I).
- Voltage – High (HV) or Low (LV)
- Annual usage – Volume of electricity (kWh) that needs to be transported.
- Peak demand – The maximum capacity that the network will need to provide during a time period.
With up to 160 different network tariffs to choose from, finding the right one for your site can be tricky. Unfortunately, this complexity often results in customers paying more than necessary. We understand the variables at play and can do an electricity bill audit to help you navigate the process with confidence, ensuring you’re on the most cost-effective tariff available.
So, speak to our energy experts today. That way you can focus on your business and we can do the rest.
Contact us today or book in and see how we can get you started on saving on your energy bills.