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A network tariff is what a network charges to use the infrastructure (poles and wires) that deliver electricity your home. Depending on your area, these are either:
In short, a Time of Use Tariff means that in some intervals you will pay more or less depending on the network in your area. The good news is, these are fixed times, so you know when they are higher or lower every day.
For the mathematically curious, you can read on…
In addition to the standard PEA calculation, customers on a Time of Use Tariff have an additional step in their PEA calculations that is included in their monthly PEA.
A Time of Use PEA for each interval includes the following considerations:
LWAP is your electricity load weighted average price in a billing period (one month), it is calculated by:
Below is an illustrative example of this calculation assuming that there are only 3 trading intervals in a billing period.
| Trading Interval | Network Rate | Spot Price | Total Price | Usage |
| 1 | 10 c/kWh | 5 c/kWh | 15 c/kWh | 5 kWh |
| 2 | 10 c/kWh | 10 c/kWh | 20 c/kWh | 3 kWh |
| 3 | 15 c/kWh | 20 c/kWh | 35 c/kWh | 2 kWh |
The main difference between PEA on Time of Use as opposed to a Flat tariff is that the Network Rate (see above table) can be different in each interval.
Note: trading intervals are currently 5 minutes each and a typical billing period is about a month, so this is a very simplified example.
Based on the above example, the LWAP will be calculated as follows:
= [ (15 x 5) + (20 x 3) + (35 x 2)] / (5 + 3 + 2) = 20.5 c/kWh
TWAP is the time weighted average price in a billing period (one month) calculated by:
Based on this example, the TWAP will be calculated as follows:
= (15 + 20 + 35) / 3 = 23.33 c/kWh
Based on the above LWAP and TWAP calculations, we subtract the two totals to get the CPEA.
LWASP – TWASP = CPEA
20.5 c/kWh – 23.33 c/kWh = – 2.8 c/kWh
Therefore in this example the CPEA = -2.8 c/kWh
In the above case, the CPEA is negative. We then minus the BPEA. For this example, we will use an BPEA of 2.5 c/kWh:
CPEA – BPEA = PEA
Therefore:
-2.8 c/kWh – 2.5 c/kWh = -5.3 c/kWh
We now have a PEA of -5.3c/kWh, which means you receive a reduction in your usage rate that month. If the base rate was 25 c/kWh, your final rate would be calculated as follows.
Base Rate + PEA = Electricity Price
Therefore:
25 c/kWh + (-5.3 c/kWh) = 19.7 c/kWh
With a negative PEA, the new usage rate would be 19.7 c/kWh
If your LWAP exceeded the TWAP AND the BPEA, your PEA that month would be positive, increasing your usage rate.
Using a 2.5 c/kWh BPEA as above, and an example positive CPEA of 3.8 c/kWh, your PEA would be:
CPEA – BPEA = PEA
Therefore:
3.8 c/kWh – 2.5 c/kWh = 1.3 c/kWh
We now have a PEA of 1.3 c/kWh, which will mean that you receive an uplift to your usage rate that month. If the base rate was 25 c/kWh, your final rate would be calculated as follows;
Base Rate + PEA = Electricity Price
Therefore;
25 c/kWh + 1.3 c/kWh = 26.3 c/kWh
With a positive PEA, the new usage rate would be 26.3 c/kWh
