Finding the right electricity tariff for you
If you’re looking at starting or changing to a new electricity plan, one of the key decisions you have to make is what type of tariff you want to be on. Choosing the right tariff means you could be saving money on electricity costs.
What is a tariff?
A tariff refers to the rate at which electricity is sold to you by your provider. The tariff may change depending on the tariff structure – for example some tariffs change depending on the time of day.
The most common types of tariff structure are:
- time of use
- single rate
- demand.
It’s important to keep in mind that not all electricity providers charge the same tariff for the same tariff structure, which is why you should compare rates. There may also be some tariffs you cannot access due to the type of meter you have.
How can I save money?
You may be able to save money on your electricity bill by choosing a tariff structure to suit your needs or by adjusting your electricity consumption to suit the tariff you’re on.
To understand which tariff structure is right for you, you need to think about the electricity usage in your household, particularly the times that you use high electricity consuming items such as heating, cooling and large appliances like a washing machine, dryer or dishwasher.
Time of use tariff
A time of use tariff will have different rates depending on the time of day. This is usually called peak, off-peak and shoulder.
- Peak: usually in the evenings from Monday to Friday. Electricity will cost the most during this time.
- Off-peak: usually overnight and on the weekend. Electricity will be the cheapest during this time.
- Shoulder: usually occurs between peak and off-peak times. Electricity will cost a bit less than peak but will be more expensive than off-peak at this time.
You will have to check with each provider to confirm the exact times they define as peak, off-peak, and shoulder.
A time of use tariff could be a good choice for you if you use most of your electricity on weekends or late at night.
Single rate tariff
A single rate tariff charges the same rate for electricity no matter what time of day it is. Typically, this tariff rate is cheaper than the peak rate on a time of use tariff. A single rate tariff may also be named flat, standard or anytime rate.
This could be the right tariff for you if you use most of your electricity during evenings on Monday to Friday.
Demand tariff
A demand tariff will charge you a demand fee on top of the usual usage and supply fees. This tariff measures your ‘demand’ of electricity at a point in time rather than your use over time. It’s important to keep in mind different providers have different ways of applying demand charges. For example, some will charge you for your highest demand point and some may charge you based on an average of your peak demand. The demand rate can also change during different seasons.
You could save money by using your appliances outside of the peak demand period, or alternating use of appliances instead of using them all at the same time.
How best to save money is dependent on your provider and how they charge demand tariffs.
Other tariffs
You provider may have other tariffs on offer. Below are two common tariffs that are used in specific situations.
- Controlled load: This tariff is specific to certain items such as pool filtration systems or electric hot water systems. Often the appliance will have its own meter and your provider will charge a rate just for the electricity that item uses. Controlled load rates are generally lower cost than other rates as they are usually only used on appliances that run over night in off peak times.
- Solar feed-in: If your home has a solar system that connects to the grid you may be able to benefit from a solar feed in tariff. This tariff allows you to earn back on your electricity bill if your system generates excess electricity that is not used in your home and fed back into the grid.
I want to change electricity plans
Choosing a tariff is just one of the decisions to make when picking an electricity plan.
Find out more about comparing and switching electricity plans.
I have an issue with my electricity bill
If you have a complaint with your current provider and can’t resolve it with them, EWOQ may be able to help. We offer a free, fair and independent dispute resolution service.