Business network tariffs explained
To help you manage your electricity costs, it’s important to understand the various business tariff options that are available. Below we explain the key features of business network tariffs that are set up to help manage the electricity distribution network.
This information applies to customers who are connected to the Ergon Energy Network in regional Queensland – Energex network tariff prices differ in South East Queensland.
Network tariffs only make up part of retail electricity costs, so you should talk to your electricity retailer to understand how they structure and price the retail electricity tariffs they offer. You can also ask for their help to do a tariff comparison to look at your electricity usage and to estimate the best tariff option for your business.
Business tariff options
The tariff options that are available to you and how your business is classified as an electricity user, are determined by the nature of your electricity consumption and the type of meters you have.
If you are unsure of your business classification, this is usually on your electricity bill, or you can check with your retailer.
Small business customers that use less than 100,000 kWh/year, are classified as Standard Asset Customers (SAC) Small.
Customers in this class with a basic meter (a meter that does not have remote read capabilities), will have access to simple network tariffs based on total kWh of electricity used during the billing period.
Customers with advanced meters (an electronic meter with remote read functionality), may have access to tariffs that feature charges based on when electricity is used (referred to as Time of Use), and also the demand (measured in kilowatts kW) that a business places on the network.
The next classification of business customers is for those using more than 100,000 kWh/year. They are classified as SAC Large.
They are charged for kWh consumed, and most will also be charged for the demand they place on the network (measured in kilowatts kW or kilo volt amps kVA). These tariffs are usually referred to as demand tariffs. Within this group of tariff options, there are tariffs that also feature time of use charging components, for both consumption and demand.
Very large businesses
For very large customers, those classified as Connection Asset Customers (CAC) or Individually Calculated Customers (ICC), tariff charges are based on electricity usage, demand and several other charging parameters related to the way the site is connected to and uses the network.
Detailed information on our network demand tariffs is available on our Network tariffs webpage.
Demand tariff charges
Charges under network demand tariffs are based on both your demand on the network, measured in 30-minute intervals, and the total amount of electricity you use. Charges are usually calculated over a monthly billing cycle.
Your retail monthly power bill for this tariff could include:
- A demand charge based on your electricity demand (kW or kVA) on the network
- A charge for the total amount of electricity used (kWh)
- A fixed daily service charge
- Metering charges.
A simple way to help explain how network demand tariff charges are calculated is to think about taking a drive in your car. One charge is for the total distance you travelled (your total electricity usage, in kWh), and another charge is for the fastest speed you reached on your trip (your demand, in kW or kVA).
The demand charge component of a network demand tariff can represent a large portion of your total power bill. Therefore, it’s important to understand how electricity demand is calculated so you can take steps to manage it.
How demand is measured
The billable demand under a network demand tariff is recorded on your electricity meter as the average demand, over a 30-minute period, rather than the single highest instantaneous demand in a period. Put simply, this is calculated by recording the electricity used during the 30-minute period (in kWh) and multiplying that by 2 to convert it to average demand.
By averaging the demand over a 30-minute period, customers are not charged for a single spike in demand when equipment is turned on.
Here’s a simple example to explain how demand is calculated:
- Consider a factory that uses 100 kWh of electricity for 15 mins when machinery is starting up, then 50 kWh for the rest of the 30-minute period. This factory uses 150 kWh in this 30-minute period. Therefore, the demand for this period is 150 kWh x 2 = 300 kW.
How demand is charged
The amount of billable demand under some tariffs is calculated using an ‘any-time’ demand approach. This means your chargeable maximum demand is the highest 30-minute demand period, regardless of when that occurs during the month.
Other demand tariffs have a pricing structure that applies charges based on when your maximum demand occurs, giving you an incentive to shift network electricity use from peak to off-peak charging periods. For general information on actions you can take to manage your site’s electricity demand, go to What is peak demand?
Another important feature of demand-based tariffs is they often have a demand threshold built in, meaning you only pay for the demand that exceeds the threshold.
For example, the Demand Small network tariff has a threshold of 30 kW (or 35 kVA), so if you maintain your demand below 30 kW, you won’t pay any additional demand charges. If you exceed 30 kW, you pay for the demand over and above 30 kW.
kVA or kW demand charging
Most customers that are on a demand-based tariff will be charged using electricity demand calculated in kilovolt amperes (kVA), rather than kilowatts (kW). Measuring demand in kVA considers the real power used on site and the extra power that may be required to deliver the power to the site because of a poor power factor.
Refer to Understanding power factor for more information on the difference between kVA and kW.
The information above relates to the network tariffs that we, the network provider, pass on to electricity retailers. The types and pricing of tariffs that electricity retailers in turn offer to their customers may differ, so you should talk to your electricity retailer about the tariffs they offer.
Tariff reviews for your business
Regardless of the size and nature of your business, the best way to find out which tariff is right for you is to conduct a tariff review. Your electricity retailer, or an independent energy adviser, can let you know the best way to go about this.
Large businesses should have at least the past 12 months of electricity usage in the form of interval data (consumption measured in 30-minute intervals).
When conducting a tariff analysis, you should also consider any changes you could make in your business that could lead to savings on your power bill, by reducing your overall electricity usage or electricity use during peak times.
The information contained in this website is for general guidance on matters of interest only. The application and impact of tariffs can vary based on specific customer requirements. Given the changing nature of tariffs and the laws, rules and regulations relevant to them, there may be delays, omissions or inaccuracies in information contained in this site.