Electricity Bill - How to Understand Demand Charge?

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Red Energy

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  freefall101 on 08/04/2024 - 15:51

  If they put you on a plan with a demand charge without telling you that's incredibly dodgy but usually they spend the time to explain the new plan and ask if you understand it. If they didn't, then yeah, complain.

  I'd also just recalc your bill, are you better off with the lower usage and additional demand charge? Pretty easy to figure out, multiple usage by 0.02277 and see if that's higher than what you paid in terms of the demand charge.

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  Looking4Deals on 08/04/2024 - 15:55

  +3

  Don't believe them when they say you can change back anytime.
  I was forced to do the same thing by Red Energy after getting Solar and when I asked to be taken off a plan with demand pricing, they told me they couldn't as Ausgrid rejected the request to move off demand pricing.
  The only solution was to move to a different provider.
  After a month or so someone from Red Energy customer service called to discuss why I left.
  They told me that they can only offer plans Ausgrid let them and only tier 1 providers like Origin, AGL and EnergyAustralia can pick what they offer customers

  • 

    kealii on 08/04/2024 - 15:58

    I work in solar, and Ausgrid is the DNSP (e.g. electricity grid operator) and they make the rules on what can and can't connect. The retailers like Red Energy just sell energy, they can't actually choose whether to put you on a fixed tariff, time of use tariff, or demand tariff (in this case). But it is interesting to learn that Tier 1 providers do have some type of power over this— which is new knowledge to me.

    • 

      lgacb08 on 09/04/2024 - 12:37

      Then you're uninformed, red or any retailer can put customer on time of use tariff. Or just vote with your feet and go with retailers that doesn't pass on demand charge (but with higher rate to absorb the cost of demand charge).

  • 

    sneijder on 08/04/2024 - 15:58

    Which provider did you move to? Not many provider offers 8c FiT like Red does

    • 

      Looking4Deals on 08/04/2024 - 16:02

      I moved to Origin who had a deal at the time for a 10c FiT and sign up credits which means I haven't had a bill to pay yet after 3 months

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  Hvrd on 08/04/2024 - 16:08

  +6

  they will never ring you up to put you on a better plan, never

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  jv on 08/04/2024 - 16:21

  +1

  Electricity Bill - How to Understand Demand Charge?

  Certainly! Let's delve into understanding demand charges on your electricity bill.

  1. What is an Electricity Demand Tariff?
     

     • A demand tariff is a pricing structure designed by energy distributors to manage strain on the electricity grid during peak usage times.
     • It encourages customers to use less energy when demand is high.
     • Unlike typical energy plans with supply and usage charges, a demand tariff includes a third fee called a "demand" or "capacity" charge.
     • Here's how it works:
       
       • Your highest energy usage over a 30-minute interval (typically between 3 pm and 9 pm on weekdays) is recorded.
       • This peak usage is used to calculate the demand value.
       • The demand value is then multiplied by your network's daily demand charge rate to determine the total cost of the demand tariff.
       • The peak usage resets each month, so hitting your peak once applies the demand rate for the entire month.
     • Demand charges vary across different electricity distributors and retailers.
     • Rates differ between summer (December-March) and winter (April-November).
       
       • In summer, typical rates range from 25 cents to 45 cents per kilowatt-hour (kW/day).
       • In winter, rates range from 8 cents to 25 cents per kW/day¹.

  2. Advantages of an Electricity Demand Charge:
     

     • If you have a good understanding of your home's electricity usage patterns, a demand tariff could save you money.
     • It encourages energy conservation during peak hours.

  3. Disadvantages of an Electricity Demand Charge:
     

     • If you're unaware of your peak usage times, it could lead to higher costs.
     • Lack of awareness may result in unexpected expenses.

  4. How Can You Reduce Electricity Demand Charges?
     

     • Be mindful of your energy usage during peak hours.
     • Consider shifting energy-intensive tasks to off-peak times.
     • Optimize your home's energy efficiency.

  5. Should You Opt for an Electricity Demand Tariff?
     

     • Evaluate your usage patterns and decide if you can benefit from demand charges.
     • If you're well-informed, it might be a cost-effective choice.

  Remember, understanding your electricity bill and making informed decisions can help manage costs effectively! 🌟🔌💡

  (1) What Is An Electricity Demand Tariff? | Canstar Blue. https://www.canstarblue.com.au/electricity/demand-tariffs/.
  (2) What Is An Electricity Demand Tariff? | Canstar Blue. https://bing.com/search?q=Electricity+Bill+-+How+to+Understa….
  (3) Residential Electricity Demand Charges - What You Need To Know. https://www.energymatters.com.au/energy-efficiency/capacity-….
  (4) Demand Charges: What are They and How Can You Reduce Them?. https://www.energyprofessionals.com/an-overview-of-demand-ch….

  • 

    Densor on 08/04/2024 - 16:36

    +3

    Wow JV. That was actually an informative answer. Thank goodness for AI.

    Energy Australia tried to force me onto a demand tariff and when I asked how it would work, the customer line had no idea. They tried sending me to an information page that was only for business customers. I had a pretty good idea of what it was as we do a lot of energy management at work and get hit with huge demand charges if we run high current draw equipment during peak hours.
    I changed to Origin who had no such requirements and have been very happy. Just the usual recommendation - every 12 months you will get changed back to the most costly plan and you need to go to the website and change back to the cheapest. Simple.

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  c64 on 08/04/2024 - 18:46

  +1

  is there any benefit to me in this?

  supposedly you get lower rates at other times of the day. i got a smart meter installed a while back and agl promptly switched me on a demand plan. it wasn't beneficial for me, and i was always worrying about minimising my usage at night. splurge on electricity one night and you literally pay for it for every day of the entire bill. ditched them and went from a single rate with another company and my bill is lower and i'm free to use electricity when i want

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  apaul on 08/04/2024 - 19:36

  We decided to go with Ampol. 25c flat rate . $1.3 daily charge, 4c solar feed in.
  10c /lit off for fuel.

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  BewareOfThe Dog on 08/04/2024 - 21:53

  Ovo energy.

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  Chandler on 09/04/2024 - 13:50

  To actually answer your question, JV's comment does specify but it is buried in AI guff…

  Demand = highest usage over a 30-minute period for the month, multiplied by the number of days and the demand rate (per kWh).

  So if the most electricity you used over a 30-minute period was 10kW, your rate is 0.16478 $ per kWh, and it was a 30-day month, the demand charge would be:

  10 x 0.16478 x 30 = $49.434

  As others have also said - compare you current bill to your old bill:

  Take two bills (one with / one without demand charge) and add the total $ figure for both usage and demand (don't include supply charge) and divide that by your actual usage (# of kWh).

  (Usage Total $ + Demand Total $) / kWH = $ / kWh
  Usage Total $ / kWH = $ / kWh

  Whichever one comes out with the lower number was the better plan (for that bill). Since demand charge depends on your maximum usage for a month, it will vary. Some months you may come out in front, some months you may have been better off without a demand plan. Whichever one ends up being better across a year is the better plan.