Published October 12, 2026
With summer just around the corner, plenty of Aussie households are bracing for the air con to start working overtime. Most of us shop around for a cheaper rate per kilowatt hour, which is a good start. What often gets missed is the tariff type sitting behind that rate.
Two homes on the same street can use the same amount of power in a year and still end up with very different bills. The difference usually comes down to when they use their electricity and how they are charged for it. Choosing a tariff that suits the way your household actually lives could save you more than chasing the lowest headline price.
In this guide, we walk you through the three main electricity tariffs in Australia, who each one tends to suit and how to work out which is the better fit for your home.
What Is an Electricity Tariff?
Your tariff is simply the way your retailer charges you for the electricity you use. Most household bills are made up of two main parts:
- A daily supply charge. This is a fixed amount you pay every day to stay connected to the grid, no matter how much power you use.
- A usage charge. This is the price you pay for each kilowatt hour (kWh) of electricity you use.
The tariff decides how that usage charge is worked out. On some tariffs every kWh costs the same. On others the price changes depending on the time of day. A third type also looks at how much power you draw at once during busy periods.
You can usually find your tariff name on the second or third page of your bill, near the usage breakdown. If you see a single usage rate, you are probably on a flat tariff. If your usage is split into peak, shoulder and off-peak, you are on a time of use tariff. A line labelled “demand” or “capacity” points to a demand tariff.
Single Rate Tariffs: Simple and Predictable
A single rate tariff, often called a flat rate, charges you the same price for every kWh no matter when you use it. Running the dishwasher at 7pm costs exactly the same as running it at 2am.
Some single rate plans use “block” pricing. Here the first set amount of electricity each day or quarter is charged at one rate, then usage above that is charged at a slightly different rate. It is still simple, as the time of day does not matter.
Who it tends to suit:
- Households that are home through the evening and can’t easily shift their usage
- Renters or busy families who would rather not plan their washing around the clock
- Anyone who values a bill that is easy to read and predict
The main downside is that you miss out on cheaper rates at quieter times of the day. If most of your power use already happens outside the evening rush, you could be paying more than you need to.
Time of Use Tariffs: Rewarding Smart Timing
A time of use tariff charges different prices at different times of the day. Most plans split the day into three periods:
- Peak: the most expensive time, usually the late afternoon and evening when most homes are cooking, cooling and watching telly. In many areas this falls somewhere around 3pm or 4pm through to 9pm.
- Shoulder: a middle rate that sits either side of the peak period.
- Off-peak: the cheapest time, generally overnight. Weekends may also be cheaper on some plans.
The exact windows depend on your local network area and your retailer, so it is worth checking the plan details before you sign up. Some newer plans also offer a cheap midday window, when rooftop solar is flooding the grid. If that interests you, our guide on free daytime electricity explains how those offers work.
Who it tends to suit:
- People who work from home or are around during the day
- Households with solar panels, a battery or an electric vehicle charged overnight or at midday
- Families happy to set the dishwasher, washing machine or pool pump on a timer
The catch is that peak rates are noticeably higher than a typical flat rate. If you run the air con flat out every summer evening, a time of use plan could cost you more. You will also need a smart meter, as an older accumulation meter can’t record when you use your power.
Demand Tariffs: Watching Your Busiest Moment
A demand tariff is the least understood of the three. Along with your supply charge and usage charge, you pay a third fee called a demand charge (sometimes listed as a capacity charge).
This charge is based on the highest amount of power your home draws at one time during a set window, usually weekday afternoons and evenings. It is measured in kilowatts (kW) rather than kilowatt hours. In most cases the network looks at your busiest half hour in that window across the month. That single figure then sets your demand charge for the whole month.
Here is a simple way to picture it. Say one hot weekday at 6pm you have the oven on with two split systems running while the dryer spins. That half hour could set a high demand figure for the entire month, even if every other day was quiet.
Some demand tariffs also change with the seasons, with higher demand rates over the summer months.
Who it tends to suit:
- Households with a battery that can cover the evening peak
- Homes that use plenty of power overall but keep it spread out across the day
- People who are happy to stagger big appliances rather than run them together
For everyone else, a demand tariff can be tricky. One busy evening can undo a month of careful habits. Read the plan details closely before agreeing to one.
Tariff Types Compared at a Glance
| Feature | Single rate | Time of use | Demand |
|---|---|---|---|
| How usage is priced | Same price per kWh all day | Price per kWh changes by time of day | Price per kWh plus a charge on your highest kW draw |
| Smart meter needed | No | Yes | Yes |
| Typical expensive window | None | Weekday late afternoon to evening | Weekday afternoon to evening |
| Bill predictability | High | Medium | Lower |
| Effort to save | Low | Medium | Higher |
| Works well with solar or a battery | Somewhat | Yes | Yes, mainly with a battery |
| Biggest risk | Paying more for off-peak use | High peak rates in summer | One busy half hour sets the monthly charge |
Exact rates, time windows and charging rules vary by network area and retailer. Always check the plan’s fact sheet before you switch.
How to Work Out Which Tariff Suits Your Home
There is no single right answer here. The best tariff is the one that matches your daily routine. A few simple steps will point you in the right direction.
- Grab your last few bills. Look at how much of your usage falls in each time period if you already have a smart meter. A summer bill and a winter bill together give you the clearest picture.
- Check your interval data. Many retailers let you download half hourly usage data through your online account. It shows exactly when your home uses the most power.
- Think honestly about your routine. If the family gets home at 5pm and everything switches on at once, a time of use or demand tariff may not be kind to you.
- Factor in solar, batteries and EVs. These change the picture a lot. A battery that covers your evening use can make a time of use or demand tariff work in your favour.
- Compare the whole plan, not just one rate. Supply charges, discounts and feed-in tariffs all add up.
What the Smart Meter Rollout Means for You
Smart meters are being installed across most of the country as part of a national rollout aimed at universal coverage by 2030. Once you have one, your retailer may suggest a different tariff.
The good news is there are rules in place to look after you. Under the Australian Energy Market Commission’s rules, your retailer can’t move you to a new tariff for two years after your smart meter is installed unless you give your explicit informed consent. After that, a retailer wanting to change your tariff has to show you what your past bills would have looked like on the new one.
So if a letter arrives about a tariff change, there is no need to panic. Take a moment to compare your options before you agree to anything.
Let Compare Today Help You Find the Right Fit
Working through tariff types, time windows and demand charges can feel like a lot on top of everything else. That is where Compare Today can lend a hand. We can help you look at electricity plans available in your area, with the tariff type in mind, so you are not just comparing headline rates.
When you are ready, head over to our electricity plan comparison page. Have a recent bill handy, as it makes the comparison more accurate. If you are also on gas, you can compare gas plans at the same time.
Frequently Asked Questions
Can I switch back to a single rate tariff if time of use doesn't work for me?
In many cases, yes. Most retailers will let you change tariffs, although it depends on what is offered in your network area. Some plans have conditions attached, so it is worth asking your retailer before you make the move.
Do I need a smart meter for a time of use or demand tariff?
Yes. These tariffs rely on knowing when you use your electricity, which an older meter can't record. A single rate tariff works with any meter type.
Is a time of use tariff cheaper if I have solar panels?
It often can be, though not always. Solar helps you avoid buying power during the day. If you still rely on the grid in the evening peak, those higher rates can eat into your savings. A battery usually makes time of use far more appealing.
Can my retailer change my tariff without asking me?
Not straight after a new smart meter goes in. Retailers need your explicit informed consent to change your tariff for two years after installation. After that, they must give you notice along with a comparison of what your bills would have been on the new tariff.
