Which Tariff should I use?

ill.jpgYou can reduce your electricity bills by making the most of the (relatively) new time-of-use Tariff 93.

Recommendation

We recommend switching to the time-of-use Tariff 93 and having a timer installed on your hot water cylinder to come on 10am - 4pm AEST*. We've analysed 36 case study households in detail and found they stood to save an average total of $284/year (12%) on their electricity bills ($108/year by switching tariffs, and a further $176/year with the hot water timer). Read on for how we arrived at this recommendation...

Tariff options

"Standard" Tariffs 31 and 41

Most Tasmanians use the combination of Tariffs 31 and 41. 

  • Tariff 31 is for lights and power points, and costs 26.431c/kWh.
  • Tariff 41 is for hard-wired heaters and hot water systems, and is cheaper at 17.164c/kWh. 

The costs are the same regardless of the time of day or day of the week. A downside to using these tariffs is that a solar panel system can only connected to one tariff or the other. So, at times you will be simultaneously exporting excess solar power on one tariff for which you are paid the low feed-in tariff (currently 8.541c/kWh) and buying it back on the other tariff at a significantly higher rate.

Time-of-use Tariff 93

With the time-of-use Tariff 93, everything is on the one tariff, but the cost changes depending on the time of day, and day of the week. There are two periods: 

  • "Peak", when the cost is a high 31.948c/kWh, and 
  • "Off-peak", when the cost is a low 14.876c/kWh.

Peak periods are weekday mornings from 7am to 10am, and weekday evenings from 4pm to 9pm (Note that the times are not adjusted for daylight savings, so in summer months the peak periods are actually 8am-11am & 5pm-10pm). All other times are off-peak; in the wee-hours of the night, during the middle of the day, and all times on weekends.

Since everything is on the one tariff, a electricity generated by solar panels will first go to meeting all of your load (lights, power points, hard-wired heaters, and hot water) before the excess is exported to the grid (see an overview of solar basics here).

Which is cheapest?

It's not immediately clear which tariff set up is going to be cheapest for you. On one hand, running a hard-wired heater on weekday mornings and evenings would be almost twice as expensive on Tariff 93 compared to Tariff 41. On the other, lights and plug-in appliances would be almost half the cost during off-peak times, including all weekend. The answer depends on how much energy you use on what and when.

So, to help us assess the tariffs, we've used some case studies with actual past usage data. As part of a previous project we installed data-loggers in households on every heater, the hot water cylinder, and the house as a whole. Energy use was recorded every ten minutes for more than a year. Here we've taken the data from 36 households and used it to calculate how much the same electricity consumption would cost under each tariff.

For these households, the average difference switching to the time-of-use tariff would make was a 4% ($108/year) saving. Three-quarters of the households would be better off under the time-of-use tariff, one being 16% cheaper! Of those worse off, most were only 1%-2% more expensive. The worst case was 10% more expensive, but this is quite an anomaly that had both the lowest Tariff 31 consumption, and the lowest Off-peak consumption of all case study households, and these are the two factors that have the greatest influence.

Influencing factors

1) Tariff 31 / Total usage

The strongest factor in making the time-of-use tariff cheaper is the proportion of total energy that is used on Tariff 31. The greater this proportion the larger the saving is likely to be. This makes sense because Tariff 31 is more expensive than Tariff 41, so you stand to save more by switching if you currently use more electricity on Tariff 31.

Of our case study households, this proportion averaged 47% and ranged from as low as 22% (this household used a lot of heating, and very little light and power), and as high as 100% (this household used gas for heating and hot water).

2) Off-peak / Total usage

The second factor is the proportion of total energy used at off-peak times. The greater the proportion the larger the saving is more likely to be. This makes sense, because electricity is cheaper on the time-of-use tariff at off-peak times.

Of our case study households, this proportion averaged 67% and ranged from 57% to 76%. 

3) Solar panels

The above results were all for households without solar, but switching to Tariff 93 is also likely to save you money when you have solar panels. The main reason was alluded to above; having everything on the one tariff increases "solar self-consumption" substantially. In the 4 case studies we've examined in detail, with a 5kW solar panel system, switching from Tariff 31/41 to Tariff 93 increased solar self consumption by 700-1,350kWh/year (about 10% to 20% solar generation). Financially, this is worth between $145/year and $275/year.

What about the legacy feed-in tariff?

The legacy solar feed-in tariff (currently 28.283c/kWh) is set to end on 31st December 2018, after which they were to drop back to the standard feed-in tariff (currently 8.541c/kWh). However, the Tasmanian Government recently announced that customers on the legacy solar feed-in tariff will get an extra 5c/kWh on top of the standard feed-in tariff for the 2019 calendar year. If you switch to Tariff 93 you will lose the extra 5c/kWh. So is it still worth switching? In most cases, yes...

How much that extra 5c/kWh will save you depends on how much of your solar energy you export to the grid. You can get this info from your past bills. As an example, let's say you have a 5kW system that generates 6,400kWh/year, of which 50% is exported (3,200kWh/year). The extra 5c/kWh amounts to an extra $160/year savings.  We expect most households to save significantly more than this by switching to Tariff 93 and getting a timer on their hot water cylinder. So, our general advice is to switch tariffs from 1st January 2019.

Save even more by changing usage times

Above we calculated the costs as if the households just switched tariff without changing when they use energy, but you can save more on the time-of-use tariff by waiting until off-peak time to run appliances like your dishwasher, washing machine, etc. The biggest and easiest change is putting a timer on your hot water cylinder so it comes on from 10am - 4pm AEST*. Read more about that here.

The total savings from switching to the time-of-use Tariff 93 with a hot water timer averaged 12% ($284/year), and ranged from -8% (more expensive) to 20% saving. Only that one anomaly household mentioned before was worse off, the other 35 households were better off.

How to change tariffs

According to Aurora Energy - If you are on the standard Tariff 31/41 there should be no cost for the new meter or the change to Tariff 93.

Contact Aurora Energy on 1300 132 003 and ask for the Tariff Metering Team.  Have your account number ready and tell them you want to change to Tariff 93.  Aurora will lodge the paperwork and their partner, Metering Dynamics, will contact you to install an advanced meter. This should take around 20 business days.

More information on tariffs can be found at the Aurora Energy website.

The most detailed techno-economic modelling for Tasmania ever!

We hope you've found this post useful and informative. See this blog post for more results and recommendations from our modelling, as well as to learn how we did it.


* 11am - 5pm daylight savings time, but there is no need to change the timer once you have it set.

Note that some details may have changed since this article was first published on 12 Nov 2018.

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