What is a “time of use” tariff?

If you are familiar with your electricity bill, you may have noticed that your plan includes peak, shoulder and  off peak rates. In the Ausgrid distribution network, approximately 30% of customers have a plan that includes time of use rates for these periods – peak being the most expensive, off-peak the cheapest and shoulder periods being somewhere between the two. These time-based rate schedules (sometimes referred to as a tariff) are called time of use (TOU).

Optimising a “time of use” tariff?

If you are familiar with how and when you use energy at home and have the ability to control your home appliances (e.g. air conditioning, pool pumps, dishwashers, dryers and washing machines); time of use tariffs can assist you to lower your cost of electricity by using your larger appliances at cheaper times of the day. If your home is in the Ausgrid area, for example, time of use periods on ‘working weekdays’ for Summer is as follows: Peak: 2pm-8pm Shoulder: All other times Off-peak: 10pm-7am

Just by moving some of your electricity usage to a shoulder period or an off peak period, means a difference in paying 44 cents per kWh during peak periods to paying either 22 cents per kWh for shoulder periods or 14.08 cents per kWh during off peak periods  (on our Nectr Green TOU Plan). Let’s calculate doing a load of washing in peak time vs. off peak for example. An average washing machine should use about 2kWh wash cycle . If you only did one wash per week, over a year this will add up to: Peak: $45.76 Off peak: $14.64 Saving: over $30

So, what are some tips for reducing your energy usage during peak hours?

The concept of ‘Peak’ basically means the period of highest demand for electricity which also happens to be when electricity is at its most expensive. Peak periods also coincide with the time  when most people are arriving home and start using their larger appliances to prepare meals and cool or warm their homes in time for dinner. This means it can be tricky to reduce or shift your usage during these hours. Some ideas to reduce your usage include:

1. Set the timer on your dryer, washing machine and dishwasher to operate in shoulder times (before 2pm and after 8pm weekdays or 7am-10pm weekends) or better still in off-peak times (after 10pm everyday) – most new appliances have convenient timers for exactly this purpose.
2. Adjusting the air conditioning temperature set point by 2 degrees celsius can significantly reduce your electricity consumption without any major discomfort; for example during Summer, operating your air conditioner at 23-24 degrees Celsius rather 21-22 degrees Celsius will reap significant savings.
3. Turn off your appliances at the power socket when you’re not using them. Appliances like your electric bath towel heaters, televisions and computer can cost you as much as $40/year in standby costs according to choice.com.
4. Educate the kids about energy usage is a good way to make sure the whole family is across your plan so you are all focussed on sustainable and cost effective energy use.
5. Don’t get too stressed if you can’t achieve these reduction tips every night, any change will make a difference to your monthly electricity bill.

Interestingly, a recent survey found that 53% of us are intentionally reducing energy usage during evenings to avoid peak prices, we turn off the air-conditioning, and avoid washing and drying, clothes. However, 50% of those trying to reduce usage during peak hours have no idea whether they’re being charged more during these times. So, how do you know what you’re being charged and when you should be turning off those appliances? Your bill might have a breakdown section.

Reading a "time of use" electricity bill

At Nectr, our aim is to make energy easy. Therefore, we’ve listed your usage alongside our charges into a table on the second page of the bill making it really simple for you to understand. The bill should also clearly show your rate, “time of use” in the example below.