Why are tariffs changing?
There’s not a short or easy answer here. We hope the info below is helpful in providing you with some context for the change.
Energy distributors and network tariffs
Energy distribution networks are an important part of the system that delivers energy to your home or business. They operate and maintain the poles and wires that transport the electricity to you. The tariffs they charge make up around 36% of the average residential power bill1.
It’s worth noting that these are not always a direct pass through from networks to customers. Retailers like Momentum have control over this. However, Momentum is billed by networks using network tariffs. This means that it often makes sense for us to structure our retail tariffs similarly to networks.
Why is my tariff changing now, in 2024?
In 2024 the distribution networks in NSW reviewed their network tariffs. A process they typically undertake every five years as they prepare what’s known as a Tariff Structure Statement (TSS). Each distributor submits their TSS to the Australian Energy Regulator (AER) for approval. The National Electricity Rules require networks to adjust their tariffs to be more “cost reflective”.
The wholesale price of electricity is set every five minutes and responds to changing supply and demand in the national grid. In the evening, when there are typically lots of customers at home cooking their dinner, watching TV and using their heating, demand for electricity increases. And the price of electricity responds. Conversely, in the middle of a sunny day where rooftop solar panels are working hard, there’s an abundance of electricity being fed into the grid. At this time there’s often less demand too, as many homes and businesses are able to run off the solar electricity that they’re generating themselves.
Over recent years the typical level of demand for electricity, at different points in the day, has changed significantly. Take a look at the chart below which compares typical demand in 2020 to 2023. They look pretty different!
What’s changing?
As part of their TSS reviews networks are leaning more to energy tariffs that are more cost reflective, so that electricity is priced differently depending on the time of day, or perhaps the time of year, that you’re using it. This means that networks prefer to see more customers on Time of Use (TOU) tariffs and fewer on “flat rate” tariffs. They have also tweaked the timing under the TOU tariffs to optimise their effectiveness. Similarly, we’re seeing more customers being placed on “demand” tariffs which aim to encourage customers to spread their energy load and avoid spikes in their electricity usage during certain times. These changes are largely reflected in Momentum’s retail tariffs for our customers.
How to make the most of a TOU tariff
If you have a TOU tariff, there are two key things you might want to know:
1. How your tariff works
Are there peak and off-peak times? Do you also have a “shoulder” time (typically between peak and off-peak)? What times do these happen? Do the times change on weekends? Or at different times of year?
You can find a summary of how your tariff works in the letter or email we sent you, underneath the table that lists your new rates and charges.
2. What times you’re using electricity
To understand when you’re using electricity, Momentum’s Power Tool is a useful, well, tool.
It’s a helpful weekly email that shows you when you used electricity and whether your usage changed week-on-week.
Unfortunately, “Power Tool” isn’t available for customers with demand tariffs. However, you don’t miss out entirely. All customers can download their usage data through My Account (go to the Usage tab to check how much electricity you’ve used).
It can be easy to get stuck in the weeds looking at this stuff. And it’s not everyone’s cup of tea. But it’s helpful to get an idea of when you’re typically using electricity. And think about how you might be able to shift your usage to make the most of your off-peak rates or minimise your usage at peak times. We recognise it’s not possible for everyone to shift their usage and that some people have more flexibility than others.
1 36% represents AusGrid Residential Flat tariff without controlled load DMO 2024-25