What are demand tariffs?

Most large businesses are charged under a network demand tariff. If your business uses more than 100MWh of electricity a year you may already be on a demand tariff or may be moving to a demand tariff in the future.

To give you more choice, we have recently introduced a new type of demand tariff to better reward those limiting their electricity demand.

For businesses that use less than 100MWh a year, we are introducing this type of tariff for the first time, so now is the time to see if they could benefit you.

How are network demand tariffs charged?

Demand tariff charges are based on both your power demand on the network (measured over 30 minute intervals) and the total amount of electricity you use.

On your monthly bill for this tariff you will see:

  • a demand charge based on your electricity demand (kilowatt (kW) or kilovolt-amperes (kVA) on the network
  • an energy charge for the total amount of electricity used (kilowatt hour or kWh)
  • a fixed daily service charge.

One way to think of demand tariffs is like taking a drive in your car. One charge is for the total distance you travelled (or your total electricity usage), and another charge is for the fastest speed you reached (or your peak demand).

Calculating maximum demand

We measure power as the average demand over 30 minutes. This is done by adding up the energy consumed, dividing by the interval of time and then taking into account the power factor of the connection (where possible), giving units of power, kVA. The highest average 30 minute period of demand over a month is known as the peak demand. Peak demand can represent a large portion of your total utility bill, depending on the overall rate structure that your business accesses through your retailer.

Where the power factor can not be ascertained, customers can receive their peak demand measure in kilowatts (kW)

Consider a factory that uses 100kWh of electricity for 15 mins when machinery is starting up then 50kWh for the rest of the 30 minute period. This factory uses 150kWh in this 30 minute period. Therefore, the demand for this period is 150kWh x 2 = 300kW.

The demand for some tariffs is calculated using ‘any-time’ demand, meaning your chargeable maximum demand is the highest 30 minute demand period, regardless of when that occurs during the month.

Other demand tariffs take into account when the maximum demand occurs, giving you an incentive to reduce demand during the 'peak' period to save on electricity running costs.

Please refer to your electricity retailer for details of any-time and time-of-use demand tariffs available.

Any-time demand tariffs

You can choose to have the tariff for your demand and energy charges fixed throughout the year. Here the demand charges are based on your maximum demand any time during the billing period.

Time-of-use tariffs

You can choose one of the new Seasonal Time-of-Use Demand tariffs. The demand and energy charges in these new demand tariffs vary based on the time-of-day, day of the week and the month of the year. The demand charging window for business is between 10am - 8pm on summer weekdays (December, January, February).

Understand your tariff

It is important that you understand how your network demand tariff works. In particular:

  • how the demand charge is calculated (any-time or time-of-use)
  • your demand charge threshold (below which you are not charged)
  • the peak and off-peak periods, if applicable, and the different rates
  • if the charge is applied to your maximum demand or your average demand.

The new demand tariffs could deliver real savings to your business, especially if you can  reduce your network demand during peak times. You may even be eligible for a cashback for implementing demand management measures under the Ergon Incentives program.

To better understand how these tariffs work, take a look at the case studies of real businesses who have made the switch and are making some big savings.

More information on our network demand tariffs is available on our Network tariffs webpage.

Retail demand tariffs

For information about retail demand tariffs, simply ask your chosen electricity retailer about the choices they are offering.

There are different options in the competitive energy market, as well as in the Queensland Government’s regulated retail demand tariffs.

Which network demand tariff is right for your business?

The best way to find out which demand tariff is right for your business is to do a formal tariff review. Your electricity retailer, or an independent energy adviser, can let you know the best way to go about this.

To compare tariffs, you will need an analysis of your energy usage for the past 12 months. You’ll also need to look at any future opportunities to manage or reduce your demand on the network at key times.

A good understanding of your future energy and demand needs is important, especially if you are considering the Seasonal Time-of-Use  Demand tariff  – as once you switch you must stay on the tariff for a minimum of 12 months.

If you need more information to help you choose a network demand tariff, call us on 1300 550 766 or email demandmanagement@ergon.com.au