I’m Joe. I run Smarta Switch with Chloe out of Chelmer, Brisbane. We re-quote business power and gas contracts across South East Queensland, small sites and multi-site C&I both.
The most common line on a bill that owners can’t explain is the demand charge. It’s also the line we save people the most money on. This guide is the long version of the explanation I’d give over the phone.
What you’ll get out of reading this:
- What a demand charge actually is, in normal English
- Why your bill has one
- The five mistakes we see almost every week
- How retailers price demand differently
- Exactly what to do about it this month
If you’d rather skip the reading: upload your last bill and we’ll mark up the demand line for you, free. We’ll tell you what it should be. We’re paid by the energy retailer when you switch, never by you.
The 30-second version
A demand charge is what your retailer charges you for the single worst 30-minute spike your business pulled from the grid in the billing period.
It’s not based on how much electricity you used over the month. It’s based on the half-hour when every machine in your kitchen, every fridge in your warehouse, every aircon in your gym was running at the same time.
Two things drive the number:
- The kVA reading at that peak, measured by your meter every 30 minutes.
- The rate per kVA, set by your contract.
A cafe might see $200 – $600 a year on demand. A medical clinic with imaging gear can see $2,500. A small manufacturer is often $15,000+. A C&I site above 1 GWh/year regularly pays $40,000 – $120,000 in demand alone.
Many contracts hold the peak reading for 12 months, so one bad 30 minutes can lock in a higher charge for a full year.
That’s the part nobody explains.
What a demand charge actually is
Your power comes through the local network, Energex if you’re in SEQ, Ergon Energy if you’re out around Toowoomba and the Darling Downs. The network had to spend money building wires and substations rated for the peak load every business might pull at the same time.
Energy use (the kWh on your bill) pays for the electricity itself. Demand (the kVA on your bill) pays for the capacity, the wires and substations that have to be there in case you run flat-out.
That’s why two cafes using exactly the same amount of electricity over a month can pay very different demand charges. The one that fired up every machine at 7am opening time pays more than the one that staggered things over an hour.
In other words: a demand charge is a tax on doing everything at once.
Why your bill has a demand charge
If your monthly electricity use is high enough, the network rules push you onto a demand-billed tariff automatically. The Energex codes are usually in the 7000s and 8000s, names like Tariff 7100, 7200, 8500 (your exact code depends on your retailer and your distribution network).
Below the threshold, you’ll usually be on a flat-rate or time-of-use tariff with no demand line. But, and this is important, retailers can place you on a demand tariff before the threshold if they think it suits you (or them). Always check whether you should be on one.
Your bill should show three things:
- A kVA value (the peak from your worst 30 minutes)
- A rate per kVA per month (set by your contract)
- A line item that’s the two multiplied
If you can’t see those three numbers, your retailer is hiding the maths. That’s the first thing we look at when we get a bill in.
The five mistakes we see every week
After hundreds of bills, the same patterns turn up. These are the ones that cost the most.
1. Nobody knows when the peak actually hit
The first question I ask a new client: “Do you know what 30 minutes drove your demand last quarter?”
Almost nobody answers correctly the first time.
Most peaks aren’t during the busy lunch rush. They happen pre-open, when ovens, fridges, aircon, the espresso machine, dishwasher and lights all spin up within the same half-hour. A 12-minute warm-up routine that starts everything together can cost a cafe around $400 a year. The same cafe staggering warm-up over 45 minutes pays nothing extra.
2. One bad day locks in a year of higher bills
This one stings. If your fridge compressor failed and the new one drew double the amps for one 30-minute window during install, your demand reading for the next 12 months can sit at that elevated number.
A lot of contracts use the anniversary peak rather than a rolling monthly peak. One bad day, one full year of higher bills. Some retailers will reset on request. Many won’t. We negotiate this clause on every quote we put through.
3. Aircon “boost” mode cools the building twice
If your aircon is set to “boost” in the morning to drop temperature quickly, it draws 2–3× normal current for 20–30 minutes. That spike is often the monthly demand peak. Setting the thermostat to start an hour earlier on a normal cycle does the same job, with no spike.
This one’s worth $300 – $1,200 a year for a typical gym, salon or medical clinic.
4. Solar doesn’t help with demand the way owners expect
Most solar systems don’t reduce demand charges meaningfully. Peaks usually happen early morning (pre-open) before the sun is doing much, or late afternoon (close-down) when the sun’s nearly gone.
Battery storage can help, it lets you shave the peak by drawing from the battery when demand would otherwise spike. But adding 5 kW of panels alone won’t shift your kVA reading. We’ve seen owners spend $25k on solar and not move their demand line a cent.
5. The demand rate itself is negotiable
Most retailers quote a default demand rate when they price you. The default is rarely the best they can do.
On a small site, the gap between the default and a sharper retailer’s quote is usually $200 – $500 a year. On a multi-site or C&I tender, we’ve moved demand pricing by $8,000 – $25,000 a year just by getting the right three retailers to compete head-to-head.
How retailers price demand (and which ones price it fairly)
This is the bit most brokers won’t write down.
The SME panel, sites under roughly 100 MWh / year
- Origin Business, competitive on demand for cafes, salons, retail. Less sharp on heavier sites.
- AGL Business, middling demand. Usually wins on energy rates, less so on demand.
- Powershop, surprisingly good on demand for low-kVA cafes and salons. Worth quoting.
- Momentum Energy, competitive on energy + demand for small hospitality and retail.
- EnergyAustralia, variable. Worth quoting but rarely wins on demand alone.
- Alinta Business, competitive on demand for some manufacturing and trades sites.
- Shell Energy SME, sharp on demand for sites with predictable load shape.
The C&I tender, sites above roughly 100 MWh / year
- SmartestEnergy Australia, often the sharpest demand price for medium-large C&I.
- Shell Energy C&I, competitive on big multi-site portfolios, especially mixed gas + power.
- AGL C&I, competitive on energy but often loses on demand pricing for tender deals.
- Origin Enterprise, typically middle of the pack. Will sharpen if there’s a competing offer on the table.
We quote across the SME panel for smaller sites and run a tender across the C&I retailers for larger ones. The point of having a panel is that no two businesses have the same best fit, and demand is usually where the gap shows up.
What to do about it this month
Four things, in order of effort:
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Find your last bill and look for the kVA line. Note the value. If there’s no kVA line, you’re on a flat-rate tariff and demand doesn’t apply to you. Stop reading.
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Identify your peak 30 minutes. Look at when heavy machines fire up simultaneously. Pre-open and post-close are the usual culprits. If your meter has interval data (most newer ones do), your retailer can show you the half-hourly demand curve on request. We can also pull it once you’ve signed a Letter of Authority.
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Stagger the start-up. Even a 15-minute spread between heavy appliances can drop your peak meaningfully. Set timers on aircon, hot water, walk-in coolers. Do it once, save for the next 12 months.
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Get the contract re-quoted. Upload your bill on this page or email hello@smartaswitch.com.au. We’ll send the comparison sheet within 24 hours. No cost, no commitment. We’re paid by the energy retailer when you switch, never by you.
Multi-site and C&I, same logic, bigger numbers
If you run multiple sites, demand charges scale fast.
A 12-store hospitality group with $400/year demand per site is paying $4,800. A 40-store retail chain at $250/site is paying $10,000. A logistics operator with six distribution centres at 500–800 kVA each is into six figures on demand alone.
For C&I tender clients, we don’t just rebid the rate, we model the half-hourly load curve for each site, identify which sites are dragging the portfolio average, and quote retailers on the aggregate shape. That’s usually where the real money sits on the demand line, more than single-site quoting can ever get to.
If you’re a procurement manager and your portfolio is above roughly 1 GWh/year, the tender process is what unlocks the meaningful money. Single-retailer panel pricing is built for SME, not for you.
Common questions
Does this apply to gas?
No. Gas has different charges, volume, capacity, and sometimes a transportation tariff. See our commercial gas in Queensland guide for the full breakdown.
Can demand be zero?
Only if there’s no metered electricity load at the site. Even a small office at idle runs around 2 kVA.
Does turning equipment off at night reduce demand?
Yes, if the peak was during operating hours. If your peak was a single pre-open spike, turning things off at night does nothing for demand (it still saves you on energy charge).
Can I dispute a peak reading?
Yes. The metering data provider records and maintains the half-hourly data. If there’s a meter fault that caused a spurious reading, your retailer can lodge a metering data dispute on your behalf. We’ve helped clients with these, sometimes the dispute succeeds.
Is there a regulator I can complain to?
Yes. For commercial energy disputes in Queensland: the Energy and Water Ombudsman Queensland. Free, neutral, and effective on demand-related disputes.
One last thing
Demand is the line item retailers most hope you don’t ask about. Asking about it gives you a discount before any negotiation even starts. Even if you don’t end up switching, ask your current retailer for a demand-rate review, sometimes that alone gets you 10 – 15% off.
If you’d rather have someone do this for you: that’s exactly what we do. Upload your bill, we mark up the demand line, we tell you what it should be, and if it’s worth switching, we handle the switch end-to-end. Same wires, same poles, new name on the invoice.
Joe Lawrence, Co-founder, Smarta Switch Australia
0435 642 592 · joe@smartaswitch.com.au