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Electricity tariffs explained

Queensland's independent economic regulator, the Queensland Competition Authority (QCA), reviews the regulated tariffs (or prices) each year and determines new prices based on a number of factors. These regulated tariffs or prices are sometimes referred to as notified prices.

Explanation of what a tariff is and how it works

The price you pay for electricity is made up of five costs:

  • generation costs: creating electricity at a power station
  • transmission costs: building and maintaining the state's extensive high voltage powerline infrastructure
  • distribution costs: building and maintaining the state's network of poles and wires that deliver electricity to homes and businesses
  • retail costs: connecting customers, billing customers and managing accounts
  • green scheme costs: costs associated with the Commonwealth Government’s Renewable Energy Target.

The carbon tax, which added to the cost of electricity in 2012-13 and 2013-14, has been repealed by the Australian Parliament, with the repeal backdated to 1 July 2014.

Components of residential electricity bill charges

Each residential electricity bill is made up of a consumption charge and a service fee.

Breakdown of typical Tariff 11 bill costs in 2014-15. Generation: 19%, network 44%, carbon tax: 7%, solar: 7%, green schemes: 3%, retail: 22%. Information provided by the Queensland Competition Authority. Totals do not add due to rounding.</

Breakdown of typical Tariff 11 bill costs in 2014-15. Information provided by the Queensland Competition Authority. Totals do not add due to rounding.

Consumption charge:

  • Also known as usage charge, variable charge or energy use charge
  • The charge for the amount of electricity you use
  • Charged in cents per kilowatt hour (c/kWh)
  • Estimated cost of the carbon tax is no longer factored into the consumption charge
  • See tariffs table for current consumption charges.

Service fee:

  • Also known as service charge, fixed charge, daily supply charge, or service to property charge
  • Charged regardless of the amount of electricity used by customers
  • Charged in cents per day or dollars per billing period
  • Covers costs that may not depend on actual energy usage, e.g. those associated with reading an electricity meter or customer administration
  • See tariffs table for current service charges

Note: some customers may pay a different price than the regulated price set by the QCA, if they are on a market contract rather than a standard retail contract.

Electricity tariffs

Tariff 11: standard residential tariff

  • Tariff 11 is the standard residential retail electricity tariff for general domestic/residential electricity supply. Most or all of a residential customer's electricity costs are charged using this tariff.
  • Customers on this tariff pay the same rate for electricity consumed, whatever the time of day.

Tariff 12: voluntary time-of-use tariff

  • Tariff 12 is a voluntary time-of-use tariff available to residential customers.
  • Tariff 12 is also available to small business electricity customers (providing the customer is also connected to another business tariff such as Tariff 20, 21 or 41).
  • Customers who have a meter capable of measuring consumption at different times of the day can access this tariff.
  • Customers on this tariff pay different rates for electricity consumed at different times of the day.
  • On this tariff, electricity consumed during off peak and shoulder times is less expensive than electricity consumed during the peak period (4pm–8pm Monday to Friday).
  • Tariff 12 is not suitable for everyone. Customers interested in this tariff should contact their electricity retailer to discuss if this is a suitable option for them.

Tariff 13: voluntary PeakSmart time-of-use tariff

  • Tariff 13 is a voluntary PeakSmart time-of-use tariff available to residential customers.
  • Tariff 13 is also available to small business electricity customers (providing the customer is also connected to another business tariff such as Tariff 20, 21 or 41).
  • Like Tariff 12, customers on Tariff 13 need a meter capable of measuring consumption at different times, so they can pay cheaper rates for electricity consumed outside the peak period (4pm–8pm Monday to Friday).
  • To be eligible for Tariff 13, customers must purchase a PeakSmart air-conditioning unit that can have its energy use capped when Energex or Ergon Energy sends it an economy mode signal.
  • Energex and Ergon Energy can only activate a PeakSmart air-conditioning unit when a signal receiver is installed in it.
  • Appliances that are not PeakSmart, such as televisions and computers, are not affected.
  • Tariff 13 is not suitable for everyone. Customers interested in this tariff should contact their electricity retailer to discuss if this is a suitable option for them.

Tariffs 31 and 33: economy or controlled load tariffs or limited guaranteed supply

  • Tariffs 31 and 33 are cheaper than Tariff 11 and may be used for appliances such as hot water systems and pool pumps.
  • Tariff 31 guarantees supply for 8 hours per day while Tariff 33 guarantees supply for 18 hours per day.
  • Residential customers must be on Tariff 11, 12 or 13 before being able to access Tariffs 31 or 33.

Switching from Tariff 11 to Tariff 12 to lower your electricity bill

Achieving savings on your electricity bill by switching to Tariff 12 will depend on how much and when you use electricity.

Not everyone will save on their electricity bill if they move from Tariff 11 to Tariff 12.

Switching from Tariff 11 to Tariff 12 may benefit households that:

  • use a large amount of electricity
  • can shift their electricity consumption away from the expensive peak period to the cheaper off-peak and shoulder periods.

Information from the QCA indicates that a typical Tariff 12 customer uses 11,000 kWh of electricity per annum, with 32% of usage occurring during the off-peak period and approximately 52% during the shoulder period. This leaves 16% of usage for the more expensive peak period.

If you were to use electricity in exactly this way, you would save approximately $200 a year on your electricity bill on Tariff 12 compared with Tariff 11.

How to switch to Tariff 12

If you are interested in switching to Tariff 12, contact your electricity retailer to discuss whether it is a suitable option for you. You will need to:

  • Find out how much electricity you use—either by looking at your electricity bills or by asking your retailer.
  • Think carefully about when you use your electricity, and whether you can shift consumption out of the peak period—only you can answer this question as your retailer will not have this precise information.
  • Ask your retailer if you will need a new electricity meter and if there is a direct or indirect cost involved. Sometimes customers need an electrician to assess their meter box and electrical connections, at a cost to the customer.

Tariff consumption rate comparison

This illustration shows how the usage rates for Tariff 12 differ from Tariff 11 for the different usage periods over a day.

2013–14 Tariff 11 and Tariff 12 consumption rate comparison

Source: yourpowerqld.com.au

Figure 1: 2013–14 Tariff 11 and Tariff 12 consumption rate comparison

Service fees

The QCA advises that the service fee, often called the fixed charge, on Tariff 11 is currently too low and does not reflect the true cost of supplying electricity to customers.

The QCA is re-balancing the service fee and the usage fee on Tariff 11 over the next 2 years, so that by 1 July 2015 it is likely that the service fees on Tariff 11 and Tariff 12 will be the same.

Find out more

Last updated
24 July 2014