What's a demand charge? The half-hour that sets your business power bill

It’s 9:15 on a Tuesday morning in a suburban deli. Three ovens are roasting the lunchtime chooks. The dishwasher is churning through its first load. The espresso machine is climbing to temperature, the aircon is dragging the shop back from a warm night, and the display fridges are cycling hard because the door hasn’t stopped swinging.

Nobody is doing anything wrong. But the meter is quietly averaging the shop’s draw across every half-hour of the month, and this one — ovens, dishwasher, coffee and cooling, all at full noise together — is about to be the hungriest.

On most tariffs, that fact costs nothing. On a demand tariff, that half-hour just wrote its own line on the bill.

What a demand charge actually is

A business power bill can charge you for two different things:

• How much electricity you use — the kWh line everyone knows.
• How fast you draw it — measured in kW, and this is the demand charge.

The reasoning is fair enough: the poles, wires and street transformer serving your shop are sized for your busiest moment, not your average. So on a demand tariff, the network recovers some of that cost through a monthly price on your peak — usually your single highest half-hour average draw inside a set charging window, each month.

Real regulated prices, 2026–27:

Tariff	Demand price	Charging window
Regional QLD small business (Tariff 24C)	$7.42 per kW, per month (ex GST)	5pm–8pm weekdays
ACT standing offer (Business kW Demand)	≈$14.80 per kW, per month (inc GST)	7am–5pm weekdays
Large business kVA demand (e.g. QLD Tariff 44A)	$23.18 per kVA, per month (ex GST)	varies

Put simply: every kilowatt you add to the month’s peak half-hour costs roughly $90–180 a year, depending on the tariff. Not once — every year, for as long as the habit lasts.

(Bigger sites get billed in kVA rather than kW — same idea, stricter measuring stick: it also counts power your equipment draws but doesn’t turn into useful work.)

Is this you? The 30-second check

Pull out a recent bill and look for a line that says “demand” or “capacity”, priced per kW or kVA. Only usage and a daily supply charge? You’re not on one.

Who is:

• Regional Queensland small businesses on Ergon’s Tariff 24C
• ACT businesses on the standing offer demand plans
• Businesses anywhere on an opt-in retailer demand plan — a growing number of these are appearing as smart meters roll out
• Anyone who’s grown past the large-customer threshold (around 35 kVA, or roughly 100–160 MWh a year in most states) — at that size, kVA demand billing usually isn’t optional

And here’s the date worth knowing: from 1 September, NSW retailers must get your explicit informed consent before assigning you — home or business — to a demand tariff. No more waking up on one. It also means the question is coming in sales calls and renewal emails, so it’s worth knowing your answer before you’re asked. (NEM-wide, there’s a related protection: for two years after a smart meter install, your retailer can’t change your tariff structure without your consent.)

The window is everything

Back to the deli. Whether that 9:15 surge costs anything depends entirely on when the tariff is looking:

• Regional QLD’s window is 5pm–8pm weekdays. The morning roast is invisible. What registers is the evening overlap — aircon still running, fridges working hard, the closing clean-up — and only on weekdays.
• The ACT’s window is 7am–5pm weekdays. The morning fire-up is precisely what’s being measured. That deli is paying for its 9:15 habit every single month.

And the flip side is the honest part: a café that shuts at 3pm, on a 5–8pm-window tariff, barely registers at all — and Tariff 24C’s usage rates are less than half the plain time-of-use alternative (18.9c peak against 44.4c, ex GST). For the right opening hours, a demand tariff can be the cheapest plan on the menu.

Demand tariffs punish carelessness. They reward shape.

The fix is a sequence, not a spend

One more mechanical detail, because it changes what’s worth doing: demand is a half-hour average, not an instantaneous spike. A three-minute surge gets diluted ten-to-one. What sets your peak is big equipment running flat-out through the same thirty minutes — which is exactly what an everyone-arrives-and-hits-every-switch morning produces.

So the fix costs nothing:

1. Stagger the start-ups. Ovens on at 8:40, and let them reach temperature before the next big load starts. Most heating equipment draws hardest while climbing and settles once it’s holding.
2. Move what can move. The dishwasher’s first load doesn’t need to run while three ovens are climbing. Twenty minutes later, same clean dishes.
3. Don’t fight yourself. Pre-cool the shop before the ovens go on — running the aircon’s recovery flat-out at the same moment as the roast is the classic self-inflicted peak.
4. Make it automatic. Timers and simple interlocks sequence the morning without anyone having to remember it on a busy Tuesday.

What’s it worth? An illustration, on our published rates: if the morning routine adds 10 kW of coincident draw to the month’s peak, in a tariff with a daytime window, that’s about $148 a month at ACT prices — call it $1,780 a year (about $890 at regional QLD’s rate, if it landed in that evening window). A four-figure line on the bill, set by a scheduling habit, removed by a sequence.

Your kilowatts will differ — the point is the price per kilowatt of habit is now a number you know.

Why your usual bill maths stops working here

This is the trap worth carrying away: on a demand tariff, you’re being read by two meters, and they reward different things.

• Switching everything off overnight saves plenty of kWh — and zero demand, because your peak half-hour was never at 2am.
• Staggering the morning start-up saves real demand dollars — and zero kWh, because the same equipment does the same work, just not simultaneously.

Every payback figure in our guides (and everyone else’s) is per-kWh arithmetic. If there’s a demand line on your bill, run each fix past both meters: does it cut the kWh, the peak, or both? Some “small” fixes get better. Some big ones earn less than they look.

The verdict

• Find the line. “Demand” or “capacity”, per kW or kVA, on a recent bill. No line, no charge — but from 1 September, NSW retailers have to ask before that changes.
• Find the window. It’s in your plan’s fact sheet — search your retailer plus “basic plan information document”. The window decides which half-hour of your day is worth money.
• Stand in the shop at your peak and look around. Whatever’s running flat-out simultaneously is what you’re paying capacity for.
• Sequence the morning. Stagger, shift, pre-cool, automate. It’s the rare energy fix with no purchase required.
• Offered a demand plan? Don’t fear it, price it. If your hours miss the window — or your peaks are controllable — it can genuinely be the cheapest plan available. Just say yes knowing your peak half-hour, not hoping about it.

If you’d rather someone read your bill’s shape for you — tariff, windows, demand line and all — that’s exactly what our free bill health check is for. Send a recent bill; we’ll tell you if there’s money in it, and if there isn’t, we’ll say that.

Demand prices: QCA gazetted notified prices for regional Queensland 2026–27 (5 June 2026) and ActewAGL’s ACT Standard plan schedule of charges from 1 July 2026 — both reset each 1 July. NSW consent rule: NSW DCCEEW retail tariff reform consultation outcomes statement (April 2026), implemented via the remade National Energy Retail Law (Adoption) Regulation from 1 September 2026. Your plan’s fact sheet beats any article, including this one.