Time of Use tariffs

Time of Use tariff means different prices will apply for your energy consumption at different times of the day

Time of Use tariffs
Photo by Lukas Blazek / Unsplash

As the name suggests, a Time of Use tariff has different pricing for your consumption depending on time of day and day of the week. Some Time of Use tariffs may also include seasonal price changes.

The main point of a Time of Use tariff is to better reflect the wholesale costs of electricity - generally, electricity is more expensive during peak times, and less expensive during off-peak times.

Time of Use tariffs have three defined time bands: Peak, Off-peak, and Shoulder, with different pricing per kWh for each time band.

It's common that off-peak time bands include weekends and public holidays.

Time of Use tariffs can also be called 'Flexible' tariffs

Transitional Time of Use tariffs

Transitional Time of Use tariffs (ToU) have been used in some distribution zones as a mechanism to help energy consumers migrate from single rate or flat rate tariffs, onto Time of Use tariffs.

Transitional ToU tariffs are designed to reduce the disparity between peak prices and off-peak prices, by making the peak rate lower, and compensating by making the off-peak and shoulder rates higher than they would otherwise be.

This has the effect that a consumer who has migrated from a single rate tariff—where all consumption is billed at the same rate, no matter what time of consumption—is less likely to experience the bill shock that might otherwise occur if they were to consume too much energy at peak times.

Transitional ToU tariffs are now closed to new connections, but some households will still be on legacy Transitional ToU tariffs.

In general under a standard ToU tariff, its possible to achieve savings by time-shifting energy consumption away from expensive peak times and into cheaper shoulder and off-peak times, thus minimising peak consumption.

This strategy is less effective under a Transitional ToU tariff, because the price difference between the peak and non-peak rates is lower, or there may be no difference at all in the price applied to each tariff component.

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