In short
A demand tariff adds a monthly charge based on your single highest half-hour of electricity use in the peak window, measured in kilowatts, on top of the usage and supply charges. One evening of running the oven, the air-conditioner and the dryer together can set the charge for the whole month. It suits a home that can keep its peak draw low and steady, punishes one that cannot, and needs a smart meter. Do not avoid it on principle; price it on your own meter data.
How the charge is worked out
The meter records usage every half hour. In each month the plan looks at the peak window, commonly four to nine in the evening, finds the half hour with the highest usage and turns it into a demand figure in kilowatts: half a kilowatt-hour in a half hour is one kilowatt of demand. That figure is multiplied by the plan's demand rate, quoted per kilowatt per day or per month, so it is charged for the whole month. A home that drew four kilowatts at once on a single hot Tuesday pays the same demand charge as one that did it every night.
In return, the usage rate on a demand plan is usually lower than on a single-rate plan, and there is no time-of-use peak rate. The plan is betting that you will keep your peaks small.
What a demand plan costs a typical home, beside the others
Who it suits
- Homes that use a lot of electricity spread evenly through the day and never run many big appliances at once.
- Homes with a battery, which can cap the grid draw in the peak window.
- Homes that can stagger the big loads: the oven before the air-conditioner, the dryer after nine.
Who it does not
- Family homes on hot evenings, where the air-conditioner, the oven and the pool pump overlap.
- Anyone who does not want to think about it. A demand charge rewards attention and penalises a single lapse.
- Homes with a basic meter, which cannot be on one at all.
How to price it honestly
A bill cannot tell you your peak demand; only your half-hourly meter data can. With a meter-data file from your retailer's portal, the paid check prices demand plans from your real peaks, and without one it says so rather than guessing. A comparison that prices a demand plan on average usage will flatter it for a home that has an evening peak and undersell it for one that does not. See also time of use or single rate.
Quick answers
Was I put on a demand tariff without asking?
Possibly. When a smart meter is installed, a home can be moved onto a time-of-use or demand network tariff, and some retailers pass that through as a demand plan. Your bill says: look for a demand charge in kilowatts or kilowatt-days. You can choose a different plan, and it is worth comparing all three kinds on your own usage before you do.
What does a demand charge in kW or kW per day mean on my bill?
It is your highest half-hour of usage in the plan's peak window during that month, converted to kilowatts and multiplied by the plan's demand rate for the whole month. A high figure usually points to one evening when several large appliances ran at once.
Sources
Official pages this answer relies on. If one of them changes, tell us and we will update the page.
- Residential electricity tariffs · Energex
- Energy Made Easy · Australian Energy Regulator