What are charge elements?

The term ‘charge elements’ describes the different ways used to work out how much businesses pay for power usage. These charges are chosen by your Distribution Network Service Provider (for example Energex) to best reflect the costs of delivering a safe and reliable supply of power. There are four main charge elements; fixed charges, flat volume charges, time of use volume charges and demand charges. Your business’ power bill may contain one or more charge elements.

By ensuring you’re on the right charge element, Energy Partners can help you reap significant savings for you power.

Demand charges.

A ‘demand charge’ is a portion of a commercial power bill where a daily amount is calculated based on a company’s highest power usage during a set period. These charges are designed to reflect the costs associated with providing sufficient network capacity to a business to cater for their maximum network demand. This means that customers who put more pressure on the network are charged more.

Demand charge customers can reduce their electricity costs by reducing their maximum demand.

Fixed charges.

Under a ‘fixed charge’, you pay a set dollar amount per day or month for electricity. For small customers, fixed charges reflect the average usage of a typical customer. For large customers, they reflect the costs associated from the connection and management of that business.

Flat volume charges.

‘Flat volume charges’ offer a flat rate applied at all times of the day to the energy used at a connection point. These charges cover the costs related to the amount of electricity consumed by a business.

For small customers who do not have a demand charge, this charge also covers costs that would have otherwise been recovered from a demand charge and are not recovered from the tariff fixed charge.

Flat volume charge customers can reduce their energy bill by reducing their power usage or by using other sources of electricity, for example solar power.

Time of use volume charges.

A time of use volume charge (ToU) is a variable charge where different rates apply to the energy used at different times of the day. ToU charges offer lower rates during off-peak times and higher rates during peak times. These charges are designed to reduce demand on the network at peak times by encouraging customers to switch non-essential electricity consumption to off-peak and shoulder times.

For small customers, ToU charges can recover costs that otherwise would have been recovered from a demand charge and are not recovered from the tariff fixed charge.

Time of use volume charge customers can reduce their costs by shifting their electricity consumption from peak times. You can do this by changing your consumption patterns or shifting your electricity loads.

Takeaway.

Understanding how power charge elements work can mean big benefits for your company. By implementing demand management strategies, you can gain more control and reduce your costs. There are a few things you should do to maximise these benefits:

• Review your network tariff each year as well as the rates you are paying for energy.
• Speak to Energy Partners if your business is on demand-based network tariffs with consumption between 100 MWh and 1.5 GWh. We’ll help you better understand your load profile and impact on the network, and ultimately reduce your running costs. We will work with you to design an engineered, measurable solution to reach your savings potential.

• You should also consider accessing the new voluntary tariffs and optimising your tariff arrangement for accelerated savings potential. Energy Partners can do this analysis on an annual basis but we also provide recommendations based on the future electricity network landscape.

To find out how Energy Partners can help your business, get in touch now.