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Changing Tariffs Guide

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Changing tariffs to save

How to change tariffs to save.

Switching tariffs isn’t an idea on most people’s radar when shopping for cheaper energy. It should be. That’s because changing tariffs can be a pathway to lower electricity bills. However, it isn’t always easy to understand what tariffs are available. Or whether you can actually switch to another tariff.

Tariff switching made easier

We’ll unpack the three main tariff types, how to see if switching might save you money, look at the rules that apply to switching tariffs, and share practical advice on how to change tariffs. It takes a lot of digging through documentation from the various electricity distribution networks (who define the available tariffs) to find out what’s even possible. So, we’ve also pulled together a summary of the rules around changing tariffs to help households in the major contestable electricity networks across Australia.

  1. Tariff types explained
  2. How to see if switching tariff type could save money
  3. Tariff switching rules you need to know
  4. How to change tariffs
  5. Smart meter upgrades

1. Tariff types explained

There are three types of electricity tariffs.

Anytime tariffs keep electricity prices simple. Also called ‘flat rate’ tariffs, these have a single rate that applies whatever time power is used. Ultimately, Anytime tariffs reflect an average across the day. So, you might be paying a small premium for the retailer to smooth out the underlying costs (such as generation) that make up the usage rate you pay. Anytime rates have been the predominant tariff as basic accumulation meters were the only way of measuring power consumption until this century. 

Changing tariffs. Anytime tariffs explained.

Time of Use tariffs split the day into 2 to 4 time periods. In each period, a different rate for electricity applies. This reflects the different costs of providing energy and network infrastructure at different times of the day. So, higher peak rates apply when demand is high in peak periods – and energy supply and network infrastructure are under pressure. At off-peak times when grid energy is abundant, consumers pay significantly lower prices. Some Time of Use tariffs include a Shoulder period between Peak and Off-peak.

Changing tariffs. Time of Use tariffs explained.

Demand tariffs include a ‘capacity charge’ based on the biggest spike in energy use during a billing period. While usage rates will be lower, an additional daily capacity charge is applied across the billing period based on the highest consumption in a 30 minute period in the peak demand time window (usually between 2-8pm weekdays). This tariff is more common for business customers. Households will naturally be wary of their energy costs being impacted by their peak use during a single half-hour in a month. You’ll want to have a good understanding of your energy use across the month – plus the opportunity to keep your energy use in check – to consider moving to a Demand Tariff. If you have a battery to shield you from the demand charges then these tariffs are worth a look. However they are often not competitively priced so be certain of your choice before switching to these tariffs.

Changing tariffs. Demand tariffs explained.

2. How to see if switching tariffs might save money

Switching to Anytime

You can quickly and accurately check to see if moving from Time of Use to a flat rate (aka Anytime tariff) could save money. If your household is currently on a Time of Use tariff, you can know with certainty if an Anytime switch is worth it! Start by running a comparison using a recent bill and using your actual time of use electricity consumption. Then add up the total energy use (Peak, Shoulder and Off Peak) and use this number to run a second comparison for Anytime plans. The cheapest plan wins!
Changing tariffs. Switching to Anytime.
Switching to Time of Use

If you are considering moving from an Anytime to Time of Use tariff, it’s a little trickier working out just how much you might (or might not) save. Particularly if you don’t have a smart meter. Without a smart meter, you won’t know how much energy you are using in each Time of Use period over the day (Peak/Shoulder/Off-Peak). So, the next best thing is to use the Time of Use split for an average household in your network. To see the Energy Regulator benchmark Time of Use usage split for average households in each network – go here. To calculate the potential cost of a Time of Use tariff – apply the period split to your total usage and run a comparison. You’ll get an indication of whether changing tariffs might be favourable or not. Before switching, it’s worth checking whether you can go back after you’ve made a move.
Changing tariffs. Switching to Time of Use.

3. Electricity tariff rules

Each network has a series of rules around the tariffs they provide to households. If you know the rules you’ll know what’s possible. Plus you’ll avoid the frustrations of chasing something that can’t happen. These rules include:
  • the default tariff that is assigned when you have a new meter installed;
  • what tariffs you can change to; and
  • how often you can change tariff (tip – it’s usually only once every 12 months).

Electricity Tariff switching rules by State

Time Of Use and Demand tariffs are the default for new meters

The Australian Energy Regulator (AER) has been championing a move to cost-reflective tariffs. When households add solar or their old meter is replaced with a smart meter – a time of use and/or demand tariff is usually assigned. If priced correctly, Time Of Use and Demand tariffs can enable consumers to reduce their overall costs. Lower bills are achieved by limiting peak-priced power use and shifting to use cheaper off-peak electricity.

4. Here’s how to change tariffs

Contact your current retailer if you wish to switch tariffs. They will request the network operator to make the change and inform you when it’s completed. If that change requires a meter upgrade, your retailer will organise that for you, usually at no cost.

Switching tariff strategies

If you’re thinking of switching retailers and tariffs at the same time, there are two ways to go.

1. Switch retailer first. Then, when the transfer is complete, ask your new retailer to change to your preferred tariff (using the rules below to guide you).

2. Alternately, you can change tariff with your current retailer. After the tariff change has been completed, then make the retailer switch.

Trying to sign up to a new retailer AND a new tariff type (not available to your current meter) upfront will be difficult. You’ll find that retailers online signup will only display plans with Tariff types available to your existing meter according to the rules of the network.

Check you can get back

A final thing that’s important to note. In most networks, if your existing tariff is “closed to new customers”, and you change to another tariff, you will not be able to switch back to your old tariff.

5. Smart Meter upgrades

To switch to a Time Of Use or Demand Tariff, you’ll need a smart meter to record when electricity is used. Outside Victoria, only ~20% of properties have a smart meter installed, so chances are you may require an upgrade to a smart meter. Your retailer can organise a new smart meter, usually at no cost. Once installed, these meters will support remote meter reading (usually sent once per day via a 3G/4G connection) and more granular meter data. For households, this means no more meter readers on your property. And the end to estimated bills.

Many retailers offer much better visibility of your usage – at least half-hourly usage and solar export data in your retailer’s app/website. By having easy access to your energy use, you can see where to make adjustments to further lower energy bills.
Changing tariffs smart meter upgrades
David Hiley

David Hiley

Why smart meters matter
We’re big fans of smart meters and Time Of Use tariffs. They help households understand when they’re importing and exporting energy. Time of Use tariffs unlock off-peak hours with lower network charges and lower retail rates. Off-peak hours are now expanding! Networks are beginning to add off-peak hours around midday when there are high levels of low-cost renewables in the grid (find out more in our our solar sponge tariff article. This is set to grow, offering more households an excellent opportunity to buy cheap, low emissions power from the grid.
Households can take control, empowered with information about energy use coupled with access to affordable daytime off-peak rates. There are many benefits from shifting energy use. This starts with lower electricity bills. At the same time, it can support using more renewable energy while taking pressure off the network in peak periods.

Time Of Use and Demand Tariffs – rates and hours