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Electricity Tariffs and What They Mean

The state of the electricity and gas industry can be highly confusing for many Australians to understand. As the household bills continue to rise, electricity can be a major contributor to the higher-cost-of-living. While it is important to always be vigilant and be on the lookout for better deals, understanding what electricity and gas tariffs are, and the rates that you can be charged is paramount to finding better plans.

If you are thinking of switching energy providers, or you are moving into a new home and in need of finding a good deal with an energy provider, then simply fill out this form and get a quote here, or you can give our energy experts a call at 1300 683 009 and they can help you further.

What is an Electricity Tariff?

Simply, a tariff is a pricing model that has been structured by the electricity provider. When entering into a signed agreement, there are two parts to a tariff that come into play:

Fixed charge: this is a set amount that pays for the daily supply of energy to your premise.

Variable charge: these charges pay for the amount of energy that you use, and as such, can change from bill to bill depending on your usage. You will see the charge on your bill as cents per kilowatt hour (c/kWh) for electricity, while gas is cents per megajoule (c/MJ).

Regardless of which contract you select, each tariff will consist of a set fixed charge, with a variable charge on top of it. 

Different Types of Energy Tariffs

There are three main types of energy tariffs.

Standard offer: this is set by the retailer or provider, and it must meet the minimum requirements of each state's government.

Market retail offer: this has no government regulation attached to it, meaning the retailer or provider can charge whatever price and contract duration that they want, as well as set their own conditions or incentives around the contract.

Government regulated offer: this is heavily regulated by the state's government, in order to offer customers a simple and reliable alternative contract.

Government regulated offers are only available in Queensland, the ACT and Tasmania. This is because there is no government regulation on electricity offers in Victoria, New South Wales and South Australia, meaning that retailers can set their own prices.

While it can be easier to compare each energy providers quotes for standard energy, the market retail offer is a little bit more convoluted to compare. This is because there are many different variables that are taken into account, aside from the c/kWh costs. While one deal may appear to be cheaper, another deal might only lock you in for a twelve-month plan instead of a twenty-four month plan, while other retailers might throw extra incentives in the offer to sweeten the deal.

Tariff Structures for Electricity

If you have tried to compare electricity plans, you might have come across some of these different tariff structures for electricity. 

Single rate: the standard or flat rate price that does not vary throughout the year, regardless of time of day.

Block rate: available for gas users, this will charge you one rate for the first "block" of usage, then a different rate for the subsequent blocks. These blocks can be divided daily, monthly or quarterly.

Time-of-use: the rates will be more expensive in 'peak' hours, such as during the evenings on weekdays, while the rates will be cheaper in 'off-peak' hours, when energy usage is at it's minimum, such as overnight. The 'shoulder' hours will be a little bit cheaper than 'peak' hours, and they make up the time in-between 'peak' and 'off-peak' periods.

Controlled load: some household or business appliances that run overnight can be subjected to a unique rate that is generally lower because electricity is supplied to the appliances overnight or 'off-peak'.

Feed-in tariff: unlike the other tariff's, this one can actually make you money somewhat. This tariff takes into account how much energy you have fed back into the grid from your solar panels. You will then get given a credit depending on how much you fed, and that will be applied to your bill.

Compare Providers

If you are ready to begin comparing energy providers, then give our energy experts a call at 1300 683 009 and they can help you find a better deal. Or, fill out this form and you can get a quote here or simply browse our energy plans by provider or region. 

Here are six tips on how to save money on electricity.

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