Power prices are always an important consideration for our customers. That’s why we want to help you understand our electricity network prices as much as possible. In doing so, you’ll be able to make better choices about the electricity you use in your home or business, including decisions about the costs and benefits of investing in technology like solar and batteries.
The electricity network is built to cater for peaks in use. In Tasmania, peaks usually occur on weekday mornings and weekday evenings (before people leave for school and work and after they return home at the end of the day). Unlike other states, where the demand for electricity peaks in summer, Tasmania’s peak occurs during winter and and often on the first day of school after school holidays.
In much the same way more road lanes can accommodate more vehicles during peak traffic hour, we need electricity network capacity to meet our customers’ total demand. Unlike a road system though, electricity can’t be slowed down or sped up. If the electricity network is unable to cope with demand, the voltage will drop and can stop anything requiring electricity from working.
In a nutshell
So that households and businesses receive only one bill in relation to their electricity supply, we charge your electricity retailer for your connection to the electricity network and your use of the network to deliver the power you use. Our charges cover the cost of both the transmission and distribution networks and all customers make a contribution towards the cost of the shared network. Except in the case of some larger businesses, our charges don't appear on the bills sent by electricity retailers. Our network charges are are rolled up in the daily fees per unit charges on your electricity bill, along with a range of other costs that make up the delivered cost of electricity.
Distribution prices 2020-21The documents below explain our distribution network charges for 2020-21. Please contact your energy retailer to find out what the charges on your power bill will be.
- 2020-21 Annual Pricing Proposal Overview (PDF)
- 2020-21 Annual Distribution Pricing Proposal (PDF)
- 2020-21 Network Tariff Application and Price Guide (PDF)
- 2020-21 Metering Services Application and Price Guide (PDF)
- 2020-21 Public Lighting Services Application and Price Guide (PDF)
- 2020-21 Ancillary Services Fee Based Services Application and Price Guide (PDF)
- 2020-21 Ancillary Services Quoted Services Application and Price Guide (PDF)
- 2020-21 Total Efficient Cost Model Methodology (PDF)
- 2020-21 Indicative Pricing Schedule (PDF)
- 2020-21 Pricing Quantities Forecasting Methodology (PDF)
- 2020-21 Alternative Control Services Pricing Model (PDF)
Distribution prices for embedded generators
The network charges for embedded generation connections are calculated on an individual basis. We also pay embedded generators the equivalent of the locational transmission network charges that would have been payable to the transmission network service provider had the embedded generator not been transferring energy into the distribution network. Download our Avoided Transmission Use of System Calculation Methodology (PDF) to find out more.
Frequently asked questions
How do you calculate prices?
We’re a regulated business. This means we’re not allowed to earn more from network charges in any given year than the amount set for that year by the Australian Energy Regulator. We calculate a range of network prices (called network tariffs) for different categories of customers, in order to recover our allowable revenue. We obtain our income to operate through these network tariffs. Even if our network charges don't appear on the bills received by customers from their electricity retailer, retailers consider our network prices when setting their retail electricity prices and calculating your electricity bill.
The network charges we bill to energy retailers for each of their customers’ use of our network are usually linked to either their customers’ consumption of electricity or the demand they place on the network. “Consumption” refers to the amount of energy used over a period of time, while “demand” refers to the rate at which electricity is being drawn from the network at any given time. The diagram below illustrates this. Under the two examples shown, the two customers might consume the same amount of electricity, but the customer with the flat load profile has a lower level of demand overall, and a lower peak demand.
The network tariffs we apply to each customer (and bill to their retailer) may include one or more of the following types of charges:
- Fixed charges: Every customer on the same network tariff is charged the same amount, regardless of how much electricity they use, when they use it or their level of demand. This sort of charge is often used to charge customers for their connection to the network, usually on a daily basis.
- Consumption charges: Customers are charged for their use of the network through a change applied to each unit of electricity they use - typically per kilowatt hour.
- Demand charges: Customers are charged for their use of the network depending on the rate at which they draw electricity from the network (known as demand). Demand is typically measured across 15 minute intervals, with demand charges usually applied to a customer's maximum level of demand recorded over the course of a billing cycle.
Time-of-use (ToU) pricing
- Time-of-use charges: ToU pricing, different prices are applied to a customer's consumption or demand, depending on the time of day and/or day of the week that they're using electricity. Some network tariffs vary their prices seasonally, but at a minimum ToU network tariffs differentiate between daily peak and off-peak periods, which are set with reference to the demand being placed on the network as a whole.
- ToU pricing is not a new concept but in the past, most customers in Tasmania had meters which only recorded the cumulative consumption of electricity over time. As a result, they were assigned to flat network tariffs, where the same price was applied to the delivery of each unit of energy, regardless of when it was used.
- Time-of-use network charges are widely accepted as being a fairer way of sharing the cost of an electricity network between the customers who are connected to it.
We serve 10 different categories of customers (known as tariff classes) who take their supply from the distribution network, and offer over 20 different network tariffs, which feature various combinations of these charges. Customers are assigned to network tariffs according to their customer category, their customer type (for example residential or small business), the voltage they take their supply at and the consumption of electricity which is typical for that type of customer. We are obligated to ensure that customers make a contribution towards the cost of the shared network that reflects their use of the network and that customers with similar connection and usage profiles are treated equally.
If you prefer a different network tariff than the one you may have been assigned to, a change may be requested through your energy retailer. There may be costs associated with changing prices, like paying for a new meter or reassignment to the new network tariff itself.
What drives the cost of running the electricity network?
We own Tasmania’s entire electricity network, which comprises 3,500 circuit kilometres of transmission lines and underground cables, 49 transmission substations, 22,300km of distribution powerlines and underground cables, 230,000 power poles, 18 large distribution substations and 33,000 small distribution substations.
It's the value of these assets that primarily drives the cost of providing the electricity network. Fortunately, most of the assets involved have operating lives measured in decades, and their cost is recovered from customers over time, rather than up-front. This is quite different from the operational costs associated with running the network, like providing a call centre, clearing trees away from powerlines and restoring power after a storm, which are recovered in the year the expenditure is incurred.
Every household, business and organisation connected to the electricity network makes a contribution towards the cost of building, running and maintaining this infrastructure and the day-to-day cost of servicing our customers and running our business. We also provide other services, such as providing education, advice and information about electrical safety. Find out more about what we do.
How do you decide how much to charge?
You pay to use the electricity network through the network tariffs we charge to your electricity retailer. Each year we submit an annual pricing proposal to the Australian Energy Regulator (AER) for its approval, which sets out the prices for each of our network tariffs. Those prices are calculated using a methodology approved by the AER which is designed to recover the exact amount of revenue which the AER has approved for TasNetworks to recover in that year.
The recovery of that annual revenue amount is divided between each network tariff (of which there are around 20) based on things like the number of customers on each tariff, the amount of electricity they’re expected to consume and the demands they typically place on the network. This is done to ensure that different categories of customers, and customers on different network tariffs, make a fair contribution towards the cost of the network and don’t subsidise other customers.
If our network tariffs are poorly designed or priced, they might result in an inequitable sharing of the network between customers. They may also encourage customers to increase their use of the network at peak times when there’s already less spare network capacity. By encouraging greater utilisation of network capacity in non-peak times, over time we can limit growth in or reduce peaks in demand and, therefore, reduce the need to add more capacity to the network. This, in turn, reduces the costs of providing network services and the prices we need to charge customers. Find out more about how we’re modernising pricing.
How are prices regulated?
As a natural monopoly, there aren’t any competitors for the network services we provide because it wouldn’t make financial sense for another business to duplicate the electricity network. It would effectively double the cost of distributing electricity to the Tasmanian community; a cost which would still have to be recovered without any increase in the number of customers.
Therefore, in order to assure customers we aren’t over-charging them for our network services, the amount of revenue we’re able to earn over a 5-year period (and in individual years within that five-year period) is determined by the Australian Energy Regulator (AER). In setting our revenue allowances, the regulator expects us to continuously improve our efficiency by reducing the cost of the services we provide without reducing the quality and reliability of our services.
Our network tariffs in any given year are set in such a way as to recover the revenue allowance approved by the AER for that year. So, while the AER isn’t actually setting our network tariffs, by capping our revenue it effectively controls the overall level of network prices.
Modified load export charges
As the sole transmission network service provider in Tasmania we’re responsible for the calculation of modified load export charges (MLEC) for the State.
- The MLEC payable to us by AEMO for their connection to the network in 2019-20 is $6,486,871 (excluding GST)
- The MLEC payable to us by AEMO for their connection to the network in 2020-21 is $5,226,665.40 (excluding GST)
Types of transmission services
- Prescribed transmission services: The services provided by us as monopoly services to many customers under the revenue cap and subject to significant regulation. They include shared network services to load customers and connection services.
- Negotiated transmission services: Monopoly services provided by us to one or a small number of customers. As such, they are subject to lighter-handed regulation. They include connection services in our substations related to a new wind farm or a new load customer.
- Non-regulated transmission services: Provided by us on a contestable basis and aren’t subject to regulation as there’s already effective competition. They include operations and maintenance services provided on privately owned transmission lines, as well as connection services between our substations and our customers’ remote sites.
Our negotiating framework sets out the procedures in setting up an agreement with a company or individual wishing to receive a negotiated transmission or distribution service.
The framework details the terms and conditions to be met in order for a company to access certain transmission and distribution services. In the case of transmission, it usually applies to a new wind farm or a new load customer. For distribution, it would usually apply to public lighting and implementation of new technologies. The provision of negotiated services is subject to lighter regulation than the rules that govern the other regulated services we provide.
Our cost allocation
Our Cost Allocation Method (CAM) outlines the methodologies we use to allocate shared transmission and distribution costs.
There are a number of costs within our business operations that can’t be easily allocated to either the transmission network or the distribution network. Such costs include the purchase and operation of computer systems (like payroll and financial systems) and the costs associated with the management and administration of the whole business.
These costs are considered shared as they’re required for the operation of both our transmission and distribution activities. The regulator approved our CAM in 2015 and we’ve used this method for the allocation of shared costs since then.