What are electricity tariffs in Australia?

Tariffs are price structures for electricity. They are rules for how you get charged when you use power.

Here are the main tariffs you'll run into:

• Single rate tariff
• Time of use tariff
• Controlled load tariff
• Demand tariff

Choosing the right tariff can help you save on your energy bill or prevent you from paying too much.

Electricity tariffs explained

Time of use tariff

• Available to: Anyone with a smart meter.
• Price structure: You'll pay extra for energy used during peak periods (when everyone else is using power) and less at other times. Peak periods differ from state to state and across providers but always apply on weekday evenings.
• Good for: People who use energy mostly during the morning and on weekends (depending on your state).

Controlled load usage tariff

• Available to: Anyone with an appliance on its own dedicated circuit.
• Price structure: You'll get lower rates on power for a single appliance, but only for a limited number of hours per day.
• Good for: Anyone with a power-hungry appliance such as an electric hot water heater.

Demand tariff

• Available to: Mandatory on some energy plans.
• Price structure: This is an extra premium added onto your supply charge. It's calculated based on the highest amount of energy you've used at one time and can vary with seasons.
• Good for: This is an automatic extra fee and not good for anyone.

Regardless of single rate or time of use, you'll see these charges on your bill:

Usage charges

This is the charge for the amount of power you've used.

It's listed as a single "peak" entry on a single rate tariff, or split into "peak", "off-peak" and potentially "shoulder" periods on a time of use tariff.

Supply charges

This is the amount you're charged simply for being connected to the energy grid. Supply charges are a flat daily rate independent of the amount of power you use.

These also reflect the costs involved in maintaining and repairing the power grid.

Time of use vs single tariff: Which is better for me?

There are 3 main things to consider when answering this question:

In theory, time of use tariffs should benefit anyone who uses most of their power outside of peak periods.

In reality, they're highly dependent on where you live and how easily you can shift your usage. You'd need to shave your peak power use down to just 25% or so of your total consumption to break-even in NSW compared to a single rate tariff – a gigantic change for most households.

Here's an example to illustrate how the 2 tariffs compare.

What is peak and off-peak energy?

Peak and off-peak energy refer to energy consumption during 2 different periods of the day – peak periods when energy demand is at its highest, and off-peak periods when energy demand is at its lowest.

The exact periods and prices vary from state to state and between providers, but generally:

• Peak. Weekday afternoons/evenings – electricity is at its most expensive.
• Off-peak. Overnight and during weekends – electricity is at its cheapest.
• Shoulder. In between peak and off-peak periods – electricity costs a little less than peak.

You only need to worry about these periods if you're on a time of use tariff. On a single rate plan, all your power use will be referred to as "peak" usage.

Examples of peak and off-peak energy times
Peak times vary from state to state and can also depend on your energy distributor and provider. Here's an example of the peak, off-peak and shoulder periods from 4 major energy providers on the Ausgrid network in NSW.

Note that Origin Energy, Energy Australia and ENGIE have no peak periods in April, May, September and October. Instead, they charge shoulder rates during peak periods.

How realistic is low peak consumption?

For NSW and QLD, 40% peak power use is highly achievable. Peak rates only apply for 5 or 6 hours in each state, so you have plenty of daylight hours to run your energy-intensive appliances.

However, in SA peak rates apply for most of the day. You'd have to use 60% of your energy between 10am and 3pm (or 1am–6am, which isn't too practical) to see the kind of savings suggested in the table above. This makes it way harder to achieve.

Should I switch to time of use?

For the majority of customers, adopting a time of use tariff will result in higher and not lower bills. The only way to benefit from a time of use tariff is to make a radical shift in how you use energy.

A 2020 study by the Victoria Energy Policy Centre found that most customers barely adapt their energy usage to increasingly expensive peak prices versus off-peak prices. Other studies have shown this to be the case outside of Victoria too. Very few people are able to shift their habits enough to save on a time of use tariff.

All of this means that unless you're really prepared to adjust your usage habits (or if you already wash your clothes at 10pm and rarely use heaters in the evenings), you're better off avoiding time of use altogether.

How to take advantage of these energy tariffs for cheap electricity

If you're on a straightforward single rate tariff, your tariff won't have much of an impact on your electricity prices. As long as your energy-hog appliances (such as a water heater or pool pump) are on their own controlled load tariff, the only other thing to consider is whether you'd benefit from a time of use tariff.

Beyond that, the plan you pick – not your tariff – determines your power prices, including its base usage and supply rates, guaranteed discounts and conditional discounts such as pay-on-time or other sign-up incentives.

Learn more about energy

Our energy guides can help you compare and understand what plan is best for you.

Best energy plans: 5 plans selected by our experts, assessed and updated regularly

Cheap energy plans: Find the cheapest energy plans available this month

Solar power plans: Got rooftop solar? Compare your options and save even more

Average energy bill: Find out how your energy bill compares to the rest of Australia