It charges for speed, not distance
Energy charges (c/kWh) price the total you use. The demand charge prices the fastest you ever draw it — the highest 30-minute average, measured in kW or kVA, inside the tariff’s demand window.
NSW commercial tariffs · explainer
Demand charges on business electricity bills: how they work
Why one bad hour can set the whole month.
A demand charge is a fee for the fastest your site ever draws power, not the total it uses. On most NSW commercial tariffs, the highest 30-minute interval inside a set window becomes the charge for every day of the billing month — which is why the bill can stay high in a month you barely used anything.
How it actually works
Three rules explain the whole charge.
One interval can set the month
On most NSW demand tariffs there is no averaging. The single highest qualifying interval becomes the billed demand for every day of the month — a short, sharp peak costs the same as running at that level all month.
The window decides what counts
Each tariff defines when demand is measured — commonly weekday afternoons and evenings. A peak outside the window may not count at all; a peak inside it sets the bill. The window matters more than the total.
kW or kVA? Some tariffs bill real power (kW); most large-business tariffs bill apparent power (kVA), which also counts reactive load from motors and compressors. If your bill is in kVA and your power factor is poor, part of the “peak” is electrical inefficiency — a different, cheaper problem to fix. The bill shows which basis applies.
The arithmetic
What one interval is worth, on a real tariff.
Endeavour Energy N19, 2026–27 rates
N19 bills the highest 30-minute kVA reading between 16:00 and 20:00 on business days. High-season network demand rate (November–March, GST-inclusive): 58.421 c/kVA/day.
50 kVA × 58.421 c/kVA/day × 31 days ÷ 100 = $905.53A site whose January peak is 50 kVA higher than it needs to be — one compressor bank starting during the evening window — pays about $905 for that interval alone. Held every month, roughly $10,100 a year across the seasonal rates.
Network rates are not retail quotes: the retailer’s pass-through decides what your bill does. And on a kVA tariff, confirm how much of the peak is reactive before counting the full reduction.
See the current N19 rates and windowsOn the bill
Demand charges on AGL, Origin, EnergyAustralia and Alinta bills.
The demand charge is set by the network and passed through by the retailer, which is why the same charge can reach you under a different name depending on who sends the bill. The names below differ. The mechanics above do not.
AGL business bills
Where the site is on a demand tariff, the demand line sits in the network charges section of an AGL business bill and passes the distributor’s charge through at cost. AGL’s own time-of-use demand plans add a retail demand window on top of the network one, so both the plan terms and the tariff code decide what counts.
Origin business bills
Origin business bills keep network charges — including any demand component — in a separate block from the energy rates. The size of that block follows the assigned network tariff, not the retail plan, which is why two Origin customers can see very different demand lines on similar usage.
EnergyAustralia business bills
EnergyAustralia bills list network charges separately from energy rates. On a demand-based network tariff the demand charge appears in the network block, priced on the peak interval the meter recorded. If the line looks wrong, the tariff code printed on the bill is the first thing to check — not the plan.
Alinta business bills
Alinta business bills label this line a capacity demand charge — the same network demand charge under a different name, priced on the peak recorded inside the window. The wording makes it look like a separate species of charge; the decode is identical to any NSW demand tariff.
Whichever retailer issues it, the bill also prints the assigned network tariff code — N19, EA010 and similar — near the charge breakdown. That code, not the retailer, decides the window, the kW-or-kVA basis and the rate. The distributor tariff guides decode each one, and if a demand line looks wrong, that code is where the conversation starts.
Reducing it
Four levers, in the order worth checking.
Change what runs at the same time
The cheapest fix is operational: stagger compressors, ovens, pumps or chargers so they do not coincide. Free to test, and interval data shows whether the peak is a scheduling accident.
Fix power factor if billed in kVA
kVA includes reactive power that does no work. Where power factor is poor, correction equipment can cut billed kVA for a fraction of any battery’s cost. Check the bill basis before anything else.
Check you are on the right tariff
Some sites sit on a demand tariff with a load shape that would cost less on time-of-use energy pricing — or the reverse. The assigned network tariff is printed on the bill and can sometimes be changed.
Shave the peak with a battery
A battery that reliably covers the qualifying interval lowers the measured maximum. This works when peaks are short and predictable — and fails quietly when they are long or random.
What the battery physically does, in the worked example above: it sits between the meter and the site, and discharges through the 16:00–20:00 window so the grid never sees more than a set limit. Erasing that 50 kVA January peak means sustaining roughly 50 kW of discharge for as long as the peak lasts — and that duration is the kWh you are really buying. A unit that covers the first hour and then runs flat leaves the peak, and the $905, intact.
A battery is the fourth lever, not the first. The dispatch reliability question — can it cover the qualifying interval every time — is what separates a real saving from a brochure number. How battery peak shaving works.
Worth ruling out
When the demand charge is not your problem.
- Your tariff has no demand component. Small-business flat and time-of-use tariffs (Ausgrid EA050, EA225) price energy and daily access only — no interval sets anything. The fix there is rates and timing, not peaks.
- Fixed charges dominate the bill. Daily access and metering charges are unaffected by any dispatch decision, and on smaller bills they can be most of it. Ausgrid’s small-business access charge alone has risen from $1.35 to $2.19 a day over four years (EA225, ex GST).
- Your peaks are long and flat. If the site runs at maximum for hours, there is no spike to shave — the honest options are tariff structure, efficiency, or supply capacity.
Quick answers
Demand charge questions, short version.
- What is a demand charge?
- A demand charge is a fee based on the fastest your site draws power — the highest 30-minute average demand, in kW or kVA, recorded inside the tariff’s demand window. On most NSW demand tariffs that single interval is then billed for every day of the month.
- How is a demand charge calculated?
- Billed demand multiplied by the tariff’s daily demand rate, multiplied by the days in the billing period. On Endeavour Energy’s N19 at 2026–27 high-season rates, 50 kVA at 58.421 c/kVA/day over 31 days works out to about $905.53 for the month.
- Are demand charges based on kW or kVA?
- Either, depending on the network tariff. Many smaller commercial tariffs bill kW (real power); most large low-voltage and high-voltage tariffs bill kVA (apparent power), which also counts reactive load. The bill shows which basis applies.
- Can a battery reduce demand charges?
- Yes, if it reliably discharges through every interval that would otherwise set the peak — which works best when peaks are short and predictable. Scheduling changes, power-factor correction and a tariff check are usually worth ruling out first.
- Why is there a demand charge on my bill if I’m with a retailer like AGL or Origin?
- Because the assigned network tariff has a demand component and the retailer passes it through — the retailer bills it, the distributor sets it. The names differ between retailers (Alinta, for example, shows it as a capacity demand charge), but the peak interval, the window and the rate all come from the network tariff code printed on the bill.
- How do I find my demand tariff?
- The assigned network tariff code is printed on the bill, usually near the charge breakdown — codes like N19, N91 or EA010. The distributor tariff guides on this site decode each one, including its demand window and rates.
The next step
The bill already contains the answer.
The assigned network tariff, the demand window and twelve months of interval data are enough to say which lever applies — and whether a battery belongs in the conversation at all.
Rate sources
General information only. Network and retailer rates change; the retailer’s contract decides what a site actually pays.