What are the different types of tariffs?

You were thinking about switching providers? If that’s the case, it’s pretty much likely that you are scraping the internet in order to find reliable information on the different energy providers on the market in Australia and what kind of tariffs they offer so you can choose the one that’s best for you.

Knowing that it’s not a one-size-fits-all type of a solution when it comes to choosing the right tariff option if you overlook the importance of the tariff type you can end up paying more than you have and getting less than what you need.

Just in case you can’t quite remember what “tariff” actually means, please take a look at our post on energy jargon and shed some light on that misty cornfield.

So, what kind of tariffs are there?

 

Fixed-rate tariff

When it comes to a fixed rate, if keeping your financial balance in order and under control is a big priority to you, then this type of price charge option is really a nice one.

With a fixed-rate tariff, there is a flat fee charged for your energy consumption over the course of a set period of time, for example from a year to a year and a half. So the biggest reassurance here is that you can always expect how much of your household budget will go to energy bills. But don’t ever think that using more power will not result in a bill raise. The fixed-rate is per unit of power and it’s meant to in a way protect your budget and help you mitigate expenses over your household.

Also, take in consideration that you will most probably get charged an exit fee if you decide to switch or leave earlier.

 

Capped tariff

As the name suggests, there is a cap or limit on the energy per unit consumption – that is the kilowatts-per-hour your household consumes, and it won’t exceed the agreed amount. Although not a cheap one, getting under a capped tariff contract with your energy provider means that regardless of price fluctuations, your agreed rate won’t go over the limit and it will actually benefit you if energy prices drop on the market.

Once again, you will also have to pay some penalty fees if you decide to cancel or switch while still under a contract.

 

Unlimited tariff

If you plan to sign up for an unlimited tariff contract with your supplier, you should know that it’s a double-edged sword. Of course, you can easily predict and plan your household expenses and out-goings when it comes to energy bills, but on the other side, you can end up paying for more energy than you use throughout the year.

You get an unlimited amount of energy at your disposal in your household and it’s a fairly decent deal if you don’t like sacrificing habits, cutting down on energy or having to actively manage your electricity usage patterns and can afford the deal.

 

Time-of-Use/Variable tariff

Picking up a variable or time-of-use tariff (it’s one and the same, just different terminology) means that your provider will set out different prices throughout the period of 24 hours (or a day), with the more expensive time periods being afternoons and mornings while at night being usually cheaper with the rates.

 

Online tariff

Worth mentioning, the online tariff is a cheaper, paperless, eco-friendly version of not having to deal with physical documents like bills.

These being the most common and generally used energy tariffs, we hope and trust you to make a suitable decision when faced with the dilemma of choosing the right tariff for your household.

Author: Claire Stapley
Claire Stapley is ElectricityComparison.com.au's Energy Editor, based in Melbourne Australia. Claire is a founding member of ElectricityComparison.com.au News and Energy Team.