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The Way We Pay for Electricity Is Changing – Demand Tariffs

Times have changed and so is the way you pay for your electricity. And guess what, the way you use your appliances could see you pay more for your power. Hielscher Electrical is here to demystify how the new changes are bound to impact consumers and what you need to do to avoid higher power bills.

What’s the Genesis?

Demand Tariffs, instituted by the Australian Energy Regulator and executed by energy distributors like Ergon and Energex are being rolled out to those who have already installed smart meters. This is poised to encourage more people especially households to consume less power when the demand is at peak causing the electricity grid to experience the most pressure. This is being implemented by all electricity providers, Ergon Energy Cairns included.

So, what is a Demand Tariff?  

A demand tariff is simply a pricing formulae structured to include a ‘energy demand’ fee for using the electricity network.

How a Demand Tariff Works and How It Differs from the Standard Tariff

Usually, the electricity costs you pay consist of various charges:

  • Supply charge—this is a flat cost charged daily by the distributor to ensure electricity gets to your property, and that wires and poles are well-maintained.
  • Usage charge—this is the total cost of electricity consumed for the period being billed (normally involves varied rates for peak, off-peak and shoulder times), and the rates are based on per kW/h of power consumed.

Consumers on a demand tariff should expect their electricity bill to include an extra charge for ‘capacity’ or ‘demand’. The additional charge is based on your highest energy consumption time (calculated in 30-minute blocks between 4pm and 9pm which are considered peak times) with monthly resets.

As such, a consumer only needs to hit their peak once for a given demand charge to become applicable to their electricity bill daily for the rest of that billing period.

In this case, the cost of electricity fluctuates based not only on how much power you ultimately consume, but also by the ‘demand’ pressure exerted on the power network throughout peak hours.

Simply put, if you switch on electronic devices like the TV, dryer, dishwasher or washing machine) within a 30-minute duration from 4pm-9pm, then your ‘demand’ on the main grid will be high.

In case you have installed a smart meter and are already using the demand tariff, your electricity charges will also be based on the demand tariff. Hence, the secret would be to alternate your energy consumption over the period from 4pm to 9pm, instead of powering all gadgets at ago.

How To Save Money with Demand Tariffs 

Consumers can avoid the costly charges on demand tariff and make savings on their electricity bills when they get to understand when and how their homes consume electricity, besides monitoring and regulating their electricity usage every month, once they receive their bill.

Top Tips to implement:

 1. Stagger usage of electronic appliances from 4pm to 9pm   

Minimise the number of appliances being powered at the same time to avoid hitting the high demands at once. Instead, they can alternate the use of appliances in 30-minute durations. For instance, you can choose to turn on your air conditioner from 6pm, start preparing dinner after 7:00pm and turn on the dishwasher after later at 8pm. 

2. Alter the time of using appliances to off-peak times   

Power your appliances during off-peak demand period when there’s no demand charge. For example, you can choose to operate your pool pump, clothes dryer or dishwasher overnight after 9pm or early morning.

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For Cairns local business owners, stay tuned! I will be writing my next post about Ergon’s new Peak Demand Tariff’s and how they affect your bill.

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