Your electricity bill covers the costs of running all parts of the energy system - generation, transmission, distribution and usage. Each part represents an essential link in the supply chain providing electricity to your home, and the development of more sustainable, reliable and affordable electricity. The distribution network is one part of the supply chain.

What is a tariff?

A tariff, also referred to as a pricing plan, is how you are charged for the electricity you use.
Pricing plans cover the costs of supplying electricity to your home or business including the costs of:

• Generating electricity
• Transporting electricity
• Maintaining the electricity network (poles and wires)
• Establishing and maintaining your electricity account and billing
• Environmental and government schemes

Some of these costs are fixed costs, meaning each household pays the same charge. Other costs vary depending on the amount of electricity used. These are variable costs. That’s why pricing plans include both fixed and variable cost components.

Types of pricing plans

The most common types of tariffs or pricing plans offered by retailers include:

• Flat rate - Your electricity is charged at the same rate all day. There is also a fixed daily supply charge.
• Time of use - Electricity is cheaper at some times of the day (‘off-peak periods’) and more expensive at others (‘peak periods’). There is also a fixed daily supply charge.
• Demand - You are charged based on the highest amount of electricity used during a specified period. There is also a fixed a daily supply charge.

What does the network tariff cover?

As an electricity distributor, Ausgrid is responsible for maintaining the electricity network (poles, wires and substations) that supply electricity to your home or business. 

Network tariff charges cover the costs of us building and managing the network to transport electricity to our customers, as well as some environmental costs and government schemes.

Your network (Ausgrid) will charge your chosen retailer, who will pass these costs on to you, the consumer. You won’t be able to see network prices directly on your electricity bill as it will just form a portion of your overall energy costs.

How are network tariffs determined?

Network tariff structures are developed with customer consultation and reflect how residential and business customers use electricity now and in the future and are set every five years by the Australian Energy Regulator.

Why are prices changing?

New ways of living and working are leading to new patterns of energy use and customers are expecting individualised and affordable, zero emissions energy solutions. Given the various ways our customers use the electricity network it is necessary for us to have a number of network tariffs that anticipate these requirements – but regardless of which network tariff is applied the goal is for network tariffs to fairly reflect the way each customer uses the network, whilst lowering the overall cost of the system.

Our network tariffs are intended to act as price signals for retailers to encourage the most efficient use of our network. 

You can find out more about our role in the electricity network at 'Engaging with your electricity retailer'.  

The role of the retailer

It is important to understand the difference between network tariffs and retail pricing plans.

Electricity distributors like Ausgrid charge retailers for the costs of distributing electricity and to encourage the efficient use of the network. These charges are referred to as network tariffs.

Retailers take these network tariffs and all the other costs that they face (including generation, transport, network maintenance, account and billing, government schemes) to set retail pricing plans. Retail pricing plans are what customers like you see and pay.

The retailer ultimately decides how they choose to manage these costs across all their customers through the pricing plans they offer and can choose how they charge their customers. That is why on your electricity bill you may only see some of these charges itemised. Each retailer can structure their prices differently, giving customers the ability to choose a retailer and a pricing plan that best suits how they use electricity.

More information on Ausgrid's Network Tariff is available in the links below. For information on Ausgrid's current network prices see Ausgrid's Network Price List.