Huglo team
March 12, 2022

Understanding the different types of retail tariff structures

Understanding the different types of retail tariff structures

If you are a household or business located in the National Electricity Market (NEM) – which includes Queensland, New South Wales, ACT, South Australia, Victoria, and Tasmania – there are several different pricing structures that will influence the total cost of your electricity. Listed below are some of the main tariff structures to help you understand your bill.

Single rate

A single rate plan is just that, a flat rate expressed ascents per kilowatt hour (kWh) no matter what time of the day or night you use the electricity. Historically this has been the most popular structure of electricity tariff as it is easier to understand and monitor than a peak/off-peak model.

Block charges

Block charges apply two different rates for your electricity use, one rate for usage up to a cap, then a different rate for all usage above the cap, similar to a mobile phone data plan. When you have reached the cap of your first block, any additional electricity you use is charged at the second block price.

Time of use or flexible rate

Time of use (TOU) pricing applies different charges to electricity usage (in kWh) at different times of the day (or week). Days are commonly split into peak and off-peak (and sometimes shoulder, which is the time between peak and off-peak) periods. Peak periods, where the electricity is most expensive, are intended to correspond to the times the network faces high demand, but in practice are wide periods that cover much of the day.

Demand tariff

In contrast to both flat rate and time of use pricing, which are based on kWh usage, a demand tariff differs in that it is based on the intensity of the electricity usage – for instance, if you were to have multiple appliances on at the same time – during pre-defined ‘peak windows’. The windows are set by reference to the usual peak network demand. A customer’s demand charge is reset after a defined period, like a month. This is a relatively new plan structure in Australia and is mainly offered in South Australia and Victoria. It also requires a smart meter to be installed.

Wholesale cost pass-through

The wholesale cost pass-through tariff is a relatively new addition in the Australian market. It is essentially a super time of use tariff, with the equivalent wholesale price for each 30-minute block passed through to the customer. This can great for customers who are able to shift the times at which they turn on their electrical appliances.

Controlled load

A controlled load (CL) tariff is an additional charge element (potentially including both fixed and variable components) for a separately metered part of a customer’s load such as electric hot water storage systems or slab or underfloor heating. A controlled load tariff is generally a lower rate as these appliances operate during off-peak hours (usually overnight). Some tariffs incorporate multiple controlled load components.

So what does this mean, and how can you know you’re picking the right plan structure that’s best for your needs? With Huglo’s Electricity Comparison service you can pick the preferences that are most important to you, and because Huglo assesses all tariff structures available across the NEM, you can feel confident that the decision you make is right for you and your needs.

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