Demand charges are a type of network charge that are a little more complicated than the common flat or time of use (TOU) tariffs.
Demand charges are not actually based on your usage - instead, it’s based on your highest 30 minute period during a period (usually a month). Usually, the demand periods apply only during a window each day (e.g. between 3-8 pm) and your highest 30 minutes of usage during this window will set the cost for the whole month.
What's good to know is that demand tariffs work out to be even cheaper than standard tariffs if you are able to spread out your usage throughout the peak period.
It's easiest to explain demand tariffs with an example - Ausgrid’s EA116 Demand Tariff
The flat usage charge for this tariff is 2.8855 c/kWh (excl. GST), and on top of that are the Demand Charges:
*example tariff from 2021-2022 financial year, your actual tariff rates will depend on your own network and metering/property type.
The network looks at each 30-minute period during the 'demand window' throughout the entire calendar month, finds the one in which you used the most power, then applies their demand rate to that period.
For example, if you were on this tariff and if your maximum power requirement between 5pm and 9pm in July was 2 kW, the demand portion of the network charges would be:
21.3184 cents x 2 kW x 31 days = $13.22 + GST
Ausgrid would still charge you the consumption rate of 2.8855 c/kWh (+GST) for all your energy consumption during the month as well, but that’s the great thing about demand tariffs, the flat usage rate is almost always much lower than other tariffs.
Demand tariffs can be quite good for Amber customers, especially if you're able to move your demand away from those peak times.
Note: The demand charge only applies during certain hours of the day so it wouldn’t make a difference if a person on this tariff were to run 5 appliances at the same time outside the demand window.
Different networks have different charge periods and demand tariff structures, so if you'd like to learn more about your demand charges, please do reach out - our team will be happy to investigate your network tariffs further with you.