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‘Save More’ unlocks pricing plans previously unavailable to you and is exclusive to Energy Umpire. It’s FREE during the beta testing and it’s renewable-friendly.
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Summary
Did you know that you are missing out on more than half of the pricing plans in the market? 75% of homes are stuck on old style single rate tariffs, and many could save a bundle by switching.
As renewable energy becomes a bigger part of the grid, modern pricing structures are being offered to help you make use of the lower cost times when renewables are abundant. These structures don’t suit everyone, but we believe that the majority of customers can benefit.
Time of use tariffs have also changed radically, and are now much easier to use. Even if you are on a time of use or demand tariff, there could easily be a better option for you. Depending on where you live many customers can switch from time of use to single rate tariffs.
Read on to find out about the three main types of electricity tariff and how you could benefit from getting the best one for your usage pattern and capitalise on the availability of renewable energy whether you have your own solar or not.
What are Electricity Tariffs?
There are 4 main types of electricity tariff.
The most simple and most common tariff type is often called Anytime or Single Rate, because all energy is charged at the same rate irrespective of when the energy is consumed. Around 75% of homes and small businesses in Australia have this price structure.
Time of Use tariffs have 2 (or sometimes 3) time periods. Energy consumed in each of these periods is charged at different rates.
In addition to energy charges, Demand tariffs have a separate charge for the maximum energy use in a half hour period during a month. These tariffs have mainly applied to larger business customers till recently but are now available for home customers.
Controlled load tariffs are used for some appliances – like electric hot water systems or underfloor heating and run in off-peak times.
Why are modern pricing structures more Renewable friendly?
Renewable energy is often in surplus during the day when the sun is shining and overnight when the wind is blowing and demand is low. The supply system is under more stress in the late afternoon and evening because demand is high and renewable energy is less able to meet it.
Typical Time of Use tariffs for homes have peak rates from 3 pm to 9 pm with off peak rates at all other times. The aim of these tariffs is to encourage usage outside the evening peak times. Increasingly, energy companies are offering plans where electricity is free or ultra low cost for 2-5 hours during the day, a so called ‘free lunch’.
Demand tariffs have a similar aim but are more focussed on giving customers an incentive to reduce their maximum call on the distribution and transmission systems.
Anytime or single rate tariffs are not renewable ready because the customer has no incentive to align any of their usage with the availability of renewable energy.
How can I benefit from Modern Electricity Tariff Types?
We estimate that more than half of customers are not using their best tariff option. Our unique tariff analysis tool can check for you, and it’s free for the trial period.
How could I benefit?
- If you would pay less under a different tariff type given your current usage pattern, and
- In the future, by making minor changes to usage patterns, e.g. running your dishwasher in the morning or just before going to bed, you could save even more.
An Energy Market Ready Grant supported us to help you switch. Just in one area we counted 20 different pricing combinations, so let us navigate it for you. We can also analyse the more complex solar plans that are increasingly common.
Already have a time of use tariff? Don’t worry, we’ll check if it’s the best choice for you.
How do Modern Tariffs support the transition?
Modern tariffs give an incentive to increasing utilisation in off peak times when renewable energy is plentiful and reduce at peak times.
I estimate that switching to the time of use tariff across homes in the National Electricity Market could reduce maximum demand by around 2240 MW OR equal to the impact of Snowy 2 on the wholesale market, which coincidentally also has a maximum capacity of 2200 MW. This is based on a price elasticity of 0.5.
There is more. There is a similar impact in reducing the need for investment in distribution and transmission. At $2M/MW, there is an additional saving of $4.4B which translates into lower network charges for everyone, not just those who transfer to the new tariffs.
Even if only adopted by say 60% of customers that could benefit immediately, demand reduction would be around 1340 MW. Extension of this pricing to business could at least double this impact.
The cost of Snowy 2 is currently estimated at $17B. Customers will pay $5B for the grid upgrade and pay Snowy Hydro for it’s capacity services. So expect to pay for Snowy 2 in your bills.
By contrast, the cost of implementing modern tariffs is close to zero. The impact of lowering maximum demand by 2200 MW would lower the cost to home customers by around 15% with reductions also accruing to customers not adopting the new tariffs.
Why should I participate?
It’s simple and free to get tariff analysis if you act now. Find out if you can save now by switching tariffs. If you can, there’s a good chance you can save more by making minor changes in how you use electricity.
Modern tariffs can help you save now, but you can save even more in the future on for example switching from gas to electric hot water and charging your electric vehicle.