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We’re a regulated business. This means we’re not allowed to earn more in the way of network charges in any given year than the amount set for that year by the Australian Energy Regulator. We calculate a range of network prices (called network tariffs in the energy industry) for the range of services we offer to different categories of customers, in order to recover our allowable revenue. We obtain our income to operate through these network tariffs. Energy retailers consider our network prices when setting their retail electricity prices and calculating your power bill.
The network charges we bill to energy retailers for each of their customers’ use of our network are usually linked to either their customers’ consumption of electricity or the demand they place on the network. “Consumption” refers to the amount of energy used over a period of time, while “demand” refers to the rate at which electricity is being drawn from the network at any given time. The diagram below illustrates this. Under the two examples shown, the two customers might consume the same amount of electricity, but the customer with the flat load profile has a lower level of demand overall, and a lower peak demand.
Our network tariffs may include one or more of the following types of charges:
Fixed: Where every customer on that tariff pays the same dollar amount, regardless of how much electricity they use. This sort of charge is often used to charge customers for their connection to the network.
Consumption: Where customers pay for each unit of electricity they use
Time-of-use: Where customers pay for each unit of electricity they use and pay different prices depending on the time of day and/or week that they use that electricity. Time-of-use pricing can also be applied to demand-based charges
Demand: Customers pay depending on the maximum amount of electricity they use during a particular period. For example, the charge may be applied to the maximum amount of electricity used by the customer:
During a single day in a billing period
During peak times when the demands being placed on the electricity network are at their highest
During off-peak times
We serve 10 different categories of customers (known as tariff classes) who take their supply from the distribution network, and offer over 20 different network tariffs, which feature various combinations of these charges. Customers are assigned to network tariffs according to their customer category, their customer type (for example residential or small business), the voltage they take their supply at and the consumption of electricity which is typical for that type of customer.
If you prefer a different network tariff than the one you may have been assigned to, a change may be requested through your energy retailer. There may be costs associated with changing prices, like paying for a new meter or the reassignment to the new tariff itself.
You pay to use the electricity network through our network tariffs. If our network tariffs are poorly designed or priced, they may encourage customers to increase their use of the network at peak times when there’s already less spare capacity. By encouraging greater utilisation of network capacity in non-peak times, over time we can limit growth in or reduce peaks in demand and, therefore, reduce the need to add more capacity to the network. This, in turn, reduces the costs of providing network services and the prices we need to charge customers. Find out more about how we’re modernising pricing.
As a natural monopoly, there aren’t any competitors for the network services we provide because it wouldn’t make financial sense for another business to duplicate the electricity network. It would effectively double the cost of distributing electricity to the Tasmanian community; a cost which would still have to be recovered without any increase in the number of customers.
Therefore, in order to assure customers we aren’t over-charging them for our network services, the amount of revenue we’re able to earn over a 5-year period (and in individual years within that 5-year period) is determined by the Australian Energy Regulator. In setting our revenue allowances, the regulator expects us to continuously improve our efficiency by reducing the cost of the services we provide without reducing the quality and reliability of our services.
So that households and businesses receive only one bill in relation to their electricity supply, we charge your electricity retailer for your connection to the electricity network and your use of the network to deliver the power you use. Our charges cover the cost of both the transmission and distribution networks and all customers make a contribution towards the cost of the shared network. Except in the case of some larger businesses, our charges are rolled up into the power bill that’s sent to you by your energy retailer.
