Understanding Common Energy Tariffs

Energy tariffs can be confusing, especially if you’re someone who doesn’t pay much attention to the details of your utility bills. Understanding what you’re being charged and why will help you make better decisions regarding getting the best energy rates.

The good news is that understanding energy tariffs doesn’t have to be complicated. You can get started by learning about the most common types of energy tariffs and how to use them to your advantage when comparing rates from different providers.

Here are some of the standard energy tariff terms used in Australia and what they mean for you.

Fixed Price

Fixed energy prices are popular because they give you a set rate that doesn’t fluctuate over time. However, if market prices drop dramatically (and they can), you’ll still have to pay your supplier’s fixed rate for energy consumption, which means you’re locked into paying more than you would with another kind of plan.

When shopping around for the best energy rates, be sure to ask whether there is a fixed price option for your contract and be sure it matches what your current supplier offers, so you don’t get caught out when your contract comes up for renewal. But overall, these tariffs are pretty popular because they’re simple and easy to understand.

Time of Use/Variable Rate

Time-of-use (TOU) electricity tariffs are billed based on when you use your energy. Rates usually fall into three usage periods:

  • Peak (usually 11 am–6 pm),
  • Off-Peak (usually 7 pm–11 am and all-day weekends)
  • Shoulder (rate is typically higher than off-peak but lower than peak).

Peak rates are highest, shoulder rates are lowest, and off-peak rates can be 40% lower than peak times.

Seasonal Price

Seasonal price tariffs are fixed price tariffs that change during different seasons. During summer, prices can be low but may spike during winter when you need more power to keep your house warm.

You will pay a cheaper rate for your electricity when it isn’t required to heat or cool your home. The opposite is true with off-peak pricing, which is at night time when there is less demand for electricity.

The right plans can offer the best electricity rates but can also be more expensive if you use energy during peak times in the day.

Seasonal Tariff Vs Standing Charge

A seasonal tariff is a low-cost electricity plan based on your predicted use for a certain period. A standing charge means you pay a fixed price, regardless of how much electricity you use.

For example, if you have a big electric heater, you might be on a standing charge to cover your energy use over winter. In comparison, if it’s summer and your energy usage is lower, you might be on a seasonal tariff.

There are several different types of energy tariffs that home and business owners can consider when looking for a new energy provider.

A tariff depends on how and when you use your energy and what kind of lifestyle you lead. Choosing an energy plan is usually about balancing cost and convenience, but every tariff has its pros and cons. Some customers prefer to focus more on price while others emphasise customer service or maybe even eco-friendliness (green power).