If you’ve ever looked at your electricity bill and wondered why it’s so high, even when you’re carefully watching your usage, you might be missing an answer that is hiding in plain sight.
For many businesses, it’s not only about how much energy you use. It’s also about the network tariff you’ve been assigned — a lesser-known charge that can quietly account for more than 60% of your total energy costs.
Network tariffs are set by your electricity distributor (not your retailer) and are based on factors like when you use power, how much you use, and how your site operates.
But there’s a catch.
These charges are often outdated, misaligned, and rarely reviewed. That is, until we help you realise how much you’re really paying.
In this article, we’re breaking down what a network tariff is, why it matters so much for your bottom line, and why a network tariff analysis could be one of the easiest yet financially rewarding decisions you’ll make this year.
What Are Network Tariffs?
If you think of your energy bill like a phone plan, the electricity you use is like your calls and data charges. But your network tariff is what you pay simply to be connected.
A network tariff is a charge applied by your electricity distributor (not your retailer) to cover the cost of delivering power to your premises. Basically, you’re paying to use the poles, wires, substations and all the other infrastructure that actually delivers the electricity to your business.
These charges depend on a few different things:
- How much power your business uses
- When you use it (peak vs off-peak hours)
- Your connection size and load profile
- The type of business operations you run
Then there are the types of tariffs (yes, there’s more than one!). The different types include:
Fixed vs Variable Tariffs
Fixed tariffs charge a set fee regardless of how much energy you use. Variable tariffs, on the other hand, fluctuate based on your consumption. Most businesses are on a mix of both.
Time-of-Use Tariffs
These charge different rates depending on when you use power. Use energy during peak times, and you’ll pay more. Shift usage to off-peak hours, and you’ll save.
Demand-Based Tariffs
This one often catches businesses out. Demand tariffs charge you based on your highest usage spike in a billing period, even if it only lasts for 30 minutes. It’s like paying rent on how much energy you might use, rather than what you actually consume.
Ryan & McNulty: Real World Results
To give you a relevant example, let’s look at how we helped Ryan & McNulty, a major timber manufacturer. We worked with Ryan & McNulty to reduce their energy costs across two key areas: first, by securing a new retail contract that saved them $186,000 over three years, and second, by switching to a more appropriate network tariff, unlocking an extra $6,500 in annual savings.
The power of expert advice and proactive cost management really can’t be understated. If you haven’t reviewed your network tariff recently, you can do so today by booking in a free network tariff review with Choice Energy.
If you do a good job around here, people remember you for it. We have introduced Choice Energy to other businesses in the Benalla region. We know we aren't the only business in the area feeling the pinch of rising energy bills.
How Network Tariffs Add Up
Electricity prices are already high enough; paying unnecessary charges on top of that is a complete waste for businesses.
The reason tariffs end up costing businesses so much is that very few people understand or even know about them. For example, if your electricity bill is less than $2500 a month, your tariffs aren’t even shown as a separate line item on your bill.
A lot of the confusion around tariffs (and why they sneak under the radar) is because of the way that they’re set. The Australian Energy Regulator (AER) decides on tariff charges on a five-year forecast. But while that framework is long-term, tariff variations can actually be introduced and considered every year. This happens when distributors apply to recover more of their infrastructure and supply costs, and the AER reviews those requests annually within that broader five-year plan.
The result is that new tariffs and classifications are constantly evolving behind the scenes without your knowledge and often without detailed consideration of your actual usage needs.
Power Factor Correction
Another hidden opportunity to reduce your electricity costs is with power factor correction (PFC). For businesses that use a lot of machinery, refrigeration, HVAC systems and other production equipment, they’re likely drawing a lot of ‘reactive power’ from the grid.
This is extra power used to maintain the voltage of this equipment to keep it running, but it isn’t the main portion of power being used. Think of it like a stopgap.
Power factor correction assesses the size of this stopgap. It looks at whether the energy allocated to your business actually reflects what you’re using. Because even if you don’t use all of that energy, you’ll still be charged for the privilege of having access to it.
By correcting your power factor, you can lower your demand charges, reduce strain on your electrical system, and avoid unnecessary penalties — all without changing how your site operates.
How Choice Energy Helps
At Choice Energy, helping businesses reduce their energy costs and get more for their money is at the centre of everything we do. This applies to network tariffs too!
The best place to start is with a free network tariff review. This is a proven process that is data-driven from start to finish. We analyse your usage and interval data to identify more cost-effective tariff structures based on how your site operates today (not how it operated years ago!)
If we find a better-suited tariff, we’ll work directly with your electricity distributor to manage the switch, with zero disruption to your supply. It’s a hands-off way to take control of one of the most overlooked costs on your electricity bill.
