CALCULATING THE PRICE EFFICIENCY ADJUSTMENT

Your PEA on a time-of-use tariff

There are three key differences in a time of use tariff compared to the flat network tariff:

1. It will consider if the time interval is in peak, off-peak or shoulder period of your assigned network tariff,
2. where there are stepped rates, it will use the first network rate, and
3. any demand charges will be billed directly as a separate charge on your account.

To determine your PEA on a time-of-use tariff, we first need to determine your CPEA.

We determine this by multiplying the total electricity price (which is the sum of the wholesale price and the network price, and updates every 5 minutes) by your electricity usage for that period. We do this for the whole billing month.

Let’s say the total price was 15c/kWh during the first price period and your usage was 5kWh.

We’d multiply these together and repeat this multiplication every time the wholesale price changed (i.e. every five minutes) while you were still using electricity. We’d then again divide the total by your total electricity usage for each price period.

This process is called the Load Weighted Average Price (LWAP).

Below is an illustrative example (note that price intervals reset every 5 minutes and a typical billing period is about a month, so this is a very simplified example):

In this example, the relevant calculation would be [ (15 x 5) + (20 x 3) + (35 x 2)] / (5 + 3 + 2) = 20.5 c/kWh.

We then need to determine your Time Weighted Average Price (TWAP). We calculate this by adding up the total price for each price period in the billing month, then dividing the total by the number of price period for the billing month

In the above example, this would result in a calculation of (15 + 20 + 35) / 3 = 23.33 c/kWh.

To get your CPEA we subtract these two figures from one another. In this example your CPEA would be 20.5 c/kWh – 23.33 c/kWh = – 2.8 c/kWh.

So now we have your CPEA, we subtract the BPEA to get your billing period PEA, or the amount that is amended on your electricity rate.

Still using the above example, the CPEA is negative and when we then minus the benchmark to get your PEA:

CPEA – BPEA = PEA

or

-2.8c/kWh – 2.5c/kWh = -5.3c/kWh

This example results in a negative PEA of –5.3 c/kWh, which means that you receive a reduction in your base rate on your bill for that month.

If the base rate was 30 c/kWh, your final rate would be calculated as follows:

Base rate + PEA = electricity price

or

30 c/kWh + (-5.3 c/kWh) = 24.7 c/kWh

If your CPEA exceeds the BPEA, your PEA that month would be positive, increasing your base rate.

Using the example above, with a base rate of 30 c/kWh and a positive PEA of 3.8 c/kWh, your electricity price would be calculated as follows:

Using the same examples from above, with a base rate of 30 c/kWh base rate and an example positive PEA of 3.8 c/kWh, your electricity price would be calculated as follows:

CPEA – BPEA = PEA

or

3.8 c/kWh – 2.5c/kWh = 1.3c/kWh

In this example your PEA would be 1.3 c/kWh, meaning you’d receive an increase to your base rate for that month. This would be calculated as follows:

Base rate + PEA = electricity price

or

30 c/kWh + 1.3c/kWh = 31.3 c/kWh