Price Factors, Tariffs and 2026 Rules
Time-of-use and demand tariffs in Australia: peak, shoulder, off-peak and kW charges
How time-of-use and demand electricity tariffs are billed, how smart meters affect your tariff, and how to tell whether these structures will raise or lower your bill.
A time-of-use tariff charges different prices per kWh depending on when you use electricity, usually most expensive in the evening peak (often around 4 pm to 9 pm), cheaper overnight, and increasingly cheap in the middle of the day when rooftop solar floods the grid. A demand tariff adds a charge based on the highest rate at which you draw power (kW) during a set window, on top of usage rates. Both reward households that can shift or spread their use. Whether they suit you depends on your daily pattern: a household that runs air conditioning, cooking and laundry together between 5 pm and 8 pm may pay more than on a flat rate, while one that runs the dishwasher overnight and charges an EV at midday may pay less. You need a smart (interval) meter for either.
Smart meters and tariff assignment
Time-of-use and demand tariffs depend on a meter that records usage every 5 or 30 minutes. Smart meters are now standard for new connections and replacements in the National Electricity Market, and Victoria completed a rollout to most homes years ago.
Your bill reflects two layers:
- The network tariff your distributor charges your retailer, which may be time-of-use or demand-based once you have a smart meter.
- The retail tariff your retailer charges you. Retailers can choose to pass the network structure through or offer you a flat rate instead.
So a smart meter does not automatically mean a time-of-use bill, but many retailers offer time-of-use plans by default for smart-meter customers. Check the "tariff" section of your plan's fact sheet.
How time-of-use periods work
Periods are set by the plan (often following the network's periods) and can differ by distributor and season. A typical pattern, for illustration only:
| Period | Indicative times | Relative price |
|---|---|---|
| Peak | 4 pm – 9 pm (some plans weekdays only) | Highest |
| Shoulder | Morning and late evening, or weekends | Middle |
| Off-peak | Overnight | Low |
| Solar soak / midday | Around 10 am or 11 am to 2 pm or 4 pm | Low on some plans |
Victoria's VDO three-period tariff includes a solar soak period from 11 am to 4 pm. The new Solar Sharer Offer and Victoria's Midday Power Saver include a free three-hour window; see Solar Sharer and Midday Power Saver.
Worked example: blended rate
Illustrative rates: peak 45 c, shoulder 30 c, off-peak 20 c per kWh. Household uses 600 kWh a month: 40% peak, 30% shoulder, 30% off-peak.
- Peak: 240 × $0.45 = $108.00
- Shoulder: 180 × $0.30 = $54.00
- Off-peak: 180 × $0.20 = $36.00
- Usage total: $198.00, a blended rate of 33 c/kWh
If a flat-rate plan charges 31 c/kWh with the same supply charge, the flat rate costs 600 × $0.31 = $186, so time-of-use is $12 a month dearer. Shift 120 kWh from peak to off-peak (for example by timing the dishwasher, pool pump and dryer) and peak drops to 120 kWh:
- Peak: 120 × $0.45 = $54.00; off-peak: 300 × $0.20 = $60.00; shoulder unchanged $54.00
- Total $168.00, blended 28 c/kWh, now $18 cheaper than flat
The full comparison method is in the flat versus time-of-use worked example.
How demand charges work
A demand tariff measures your maximum demand: the highest average kW in any half-hour (or similar interval) during the demand window, often late afternoon to evening on weekdays. The charge is usually expressed per kW per day and applied for the billing month.
Illustrative example: demand charge 30 c per kW per day. On one hot afternoon you run the air conditioner (3 kW), oven (2 kW) and dryer (2.5 kW) together for half an hour, so your maximum demand for the month is 7.5 kW.
- 7.5 kW × $0.30 × 30 days = $67.50 for the month
If you had staggered the dryer to the morning, maximum demand might have been 5 kW: 5 × $0.30 × 30 = $45, a $22.50 difference from one decision. Usage rates on demand plans are often lower than on flat plans to compensate.
Demand tariffs suit households that can manage big loads, such as those with batteries or smart controls. They can surprise those who cannot.
Who usually benefits and who does not
| Household pattern | Time-of-use | Demand |
|---|---|---|
| Out during the day, heavy evening use | Often worse | Often worse |
| Home during the day with solar | Often better | Depends |
| EV charged overnight or midday | Often better | Better if charger is managed |
| Battery that covers the evening peak | Often better | Often better |
| Electric storage hot water on a controlled load | Neutral (separate tariff) | Neutral |
| Medical equipment that runs at fixed times | Check carefully | Check carefully |
Steps before you accept one
- Download 12 months of interval data from your retailer or distributor, or let Energy Made Easy or Victorian Energy Compare pull it with your NMI.
- Compare the plan on your actual usage profile, not the typical household.
- Check the exact period times and whether they change with daylight saving.
- For demand plans, ask how maximum demand is measured and over what window.
- Estimate a quarter in the bill estimator using a blended rate.
Also read the pricing overview and the controlled load guide.
FAQ
Can I ask to go back to a flat rate?
Often yes, if your retailer offers a flat-rate plan for your network tariff. Some networks require cost-reflective network tariffs for smart-meter customers, but the retailer may still offer a flat retail price. Ask your retailer.
Do weekends count as peak?
It depends on the plan. Some plans apply peak rates every day; others treat weekends as shoulder or off-peak.
Will daylight saving shift my periods?
Some plans follow local time and others use standard time. Check the plan's fact sheet.
Are demand tariffs common for households?
They exist in several network areas but are less common than time-of-use for residential retail plans. Read the fact sheet carefully if you see one.
Sources
- Energy Made Easy — explainers on tariffs and smart meters, plan comparisons
- Australian Energy Regulator — network tariff structure statements
- Australian Energy Market Commission — rules on metering and tariffs
- Victorian Energy Compare — Victorian plans with smart meter data
