How do demand tariffs work with Amber?

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What is a demand tariff?

Demand tariffs are a type of network tariff that are a little more complicated than the common flat or time-of-use (TOU) tariffs.

Demand tariffs charge consumers not only on the amount of energy used (kWh), but also on their peak electricity demand during specified periods ('demand windows'), usually measured in kilowatts (kW). If you're on a demand tariff, this means your bill reflects both how much electricity you consume overall, and the most electricity you use within a demand window

What are the benefits of being on a demand tariff?

Demand tariffs were created to encourage households to smooth their electricity usage throughout the day, easing the load on energy infrastructure during busy times.

To compensate you, the other costs for using electricity will be lower on a demand tariff - meaning if you can minimise your demand charge, you'll likely end up with a lower bill. 

A 2023 ACCC report also found that the median residential customer in Australia saved money being on a demand tariff compared to traditional flat or time-of-use tariffs, though results will vary for each customer.

What is the drawback of a demand tariff, and how do I minimise my demand charge?

The main downside of a demand tariff is that if your peak usage is very high during a demand window, you could face a high demand charge, increasing your overall bill. For example, charging an electric vehicle during a demand window would result in a very high demand charge. Though for most households and in most cases, you can keep your demand charge under control with some awareness and management.

To minimise your demand charge, there are two main things to keep in mind:

  1. Try and avoid using many energy intensive appliances at the same time (e.g. air con, dishwasher, dryer) - if you can manage this reasonably well, you'll likely end up with a lower bill
  2. If possible, shift some of your usage outside of demand windows - it's usually cheaper as well!

Note: The demand charge only applies to usage during the demand window - the demand charge on your bill won't be impacted by how much power you use outside of this demand window.

Find out how much power your devices at home draw here. 

How is my demand charge calculated?

Demand charges are generally calculated based on the highest half-hour of electricity use during demand windows each month. For households, the demand window is often in the evening (e.g. between 3-8 pm), and often only on weekdays.

This half-hour (peak usage) sets your demand charge for the month, which is calculated as follows:

  • The highest usage 30-minute period in the demand window is identified (peak usage, in kWh)
  • Your peak usage is then multiplied by 2 to estimate your peak demand (in kW)
    • If your peak usage is 1.5kWh over 30 minutes, it is used at a rate of 3kW
    • As a comparison: covering 20km in 30 minutes (distance), means that you were travelling 40km/hr (rate)
  • Your monthly demand charge comes from multiplying your peak demand, by the demand rate and the number of days in the month (if your demand charge is a daily rate)

In the example below, Jack and Jill used the same amount of energy across the month, but one night Jack ran the air con, dishwasher and dryer at the same time - this night of peak demand sets the demand charge for the month. Jill's lower peak demand resulted in a lower monthly demand charge.

Note that different networks have different prices, charge periods and demand tariff structures - so if you'd like to learn more about your demand charges, visit your network distributors website and look for their latest tariff information.

How do I see my demand charges?

Your demand charge (if applicable) is detailed on your bill on the second page, and explained further on the third page.

Second page:


Third page:

For more information on how to read your bill, check out our bill explainer here.

When are my demand windows?

You can see your demand windows in the Amber app, in the live prices tab! Otherwise, the table below details the demand windows for each network (as of 2024). These are summarised for each Network, you can find more details on their website. 

What other tariff options are available?

Demand tariffs generally work out to be cheaper than standard tariffs if you are able to spread out your usage throughout the demand window

Your network might have a regular time-of-use or flat rate tariff you can apply to change to, but please note that on these you would expect to see an increase to your average usage rate (c/kWh).

As an example, Ausgrid tariff rates are listed below - you'll see that an demand tariff can be cheaper than a ToU tariff, if you're able to limit your peak usage during a demand window.

Each network has different alternative tariffs and rules about switching, and tariff changes are in most cases limited to once every 12 months. 

To view your options, simply visit your network distributors website and search for their latest tariff documentation. Tariff suitability is unique to each household's consumption needs and patterns and not something we can generally advise you on.

 

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