Electricity and Gas Tariffs Explained
15th August 2024
So you can understand your energy bill, you’ll need to know a thing or two about tariffs. Here are some definitions to help.
Single rate tariffs. Block rates. Demand tariffs. Controlled loads. Feed-in tariffs. There may be words and phrases on your energy bill that you haven’t come across before. The good news is that learning the language of energy is easy – and we’re here to help.
Below you’ll find some of the words and charges you might come across on your energy bill.
What are the different charges on my electricity bill?
On your electricity bill there are different electricity charges. They can generally be broken up into:
- Supply Charge/Daily Supply Charge/Service To Property Charge – This is the cost to supply electricity to your property. On the Red Energy bill, it’s called the ‘Service to Property’ charge and is calculated by multiplying the number of days in the billing period by a fixed rate.
- Usage charges – This is where tariffs come into play. These charges are for the amount of electricity you have consumed during the billing period.
Not a customer? Join Red Energy today.
Types of electricity tariffs
In its simplest terms, an electricity tariff is the pricing structure used to calculate how much you pay for the energy you use. Depending on your energy provider and where you live (each state is different), there may be different types of electricity tariffs:
- Single rate tariff (also called flat rate, standard rate or anytime rate) – as its name suggests, a single rate tariff has one rate, day and night. You pay the same rate for your electricity consumption at all times of the day.
- Time of use tariff – with this tariff, you are charged different rates for energy usage that occurs at different times of the day. Your energy retailer will tell you the times your peak and off peak rates apply. Generally, this tariff will include:
- A peak rate – this is when electricity costs the most
- An off-peak rate – this is the cheapest rate,
- A shoulder rate – this rate is between the two.
- Block rate tariff – you’re charged one rate for an initial block of energy usage, and then a lower (or sometimes higher) rate for subsequent blocks.
- Controlled load/two-rate tariff – this is where you have a separate tariff (usually with lower rates) for an appliance that consumes a lot of energy, like a hot water system. A controlled load tariff is a secondary tariff and when paired with a single rate tariff is known as a two-rate tariff.
- Demand tariffs – this will have the usual usage and supply charges, and will also have a demand charge. A demand charge is based on your highest energy usage over each monthly billing period (measured in 30-minute blocks) during peak times.
- Feed-in tariff – this comes into play if you have solar panels that produce excess electricity to your needs and this electricity is fed into the grid. You get a credit for each kilowatt hour of energy you export to the grid.
Types of gas tariffs
Things are a little simpler when it comes to gas tariffs. Gas only comes as a single rate, with most retailers offering tariff blocks that work in the same way as electricity block rates – that is, you pay one rate for the first block of usage and then a different rate for the remaining usage. Gas has seasonal Time of Use tariffs with different rates for winter and summer.
The final word
A tariff is a formula used to calculate how much you pay for your energy consumption, with different tariffs available depending on where you live and the energy provider you use. If you live in Queensland, New South Wales, Australian Capital Territory, Victoria or South Australia and would like to know what Red Energy tariffs look like in your area, visit redenergy.com.au/quote.
Join Red today
We’ve been powering what matters to Australians since 2004. Switch or move with Red today.