What is a network tariff & how does it affect electricity prices?

Quick summary

Network tariffs help cover the infrastructure that delivers electricity to your site, including poles, wires, substations, and other network infrastructure.

They can make up a significant portion of a large business electricity bill and are set by regulated network operators, not energy retailers.

Understanding how your tariff works, what drives your network charges, and whether your current tariff remains appropriate for your site can help you identify opportunities to better manage your energy costs.

Key takeaways

• Network tariffs help cover the infrastructure that delivers electricity to your business. They’re separate from your retail energy rate and generally aren’t negotiated in the same way as retail rates.  

• Network operators are regulated by the Australian Energy Regulator (AER), which sets how much revenue they can recover from customers over a five-year regulatory period. Network tariffs can still be adjusted each year within that period.  

• The tariff applied to your site can depend on factors such as location, connection type, usage and demand profile, and meter type.  

• Some network tariffs include demand charges based on the highest level of electricity your site draws from the network during a set measurement period.  

• While network tariffs aren’t generally negotiated like retail energy rates, understanding your tariff can help identify opportunities to better manage your network costs.  

Network charges can be a significant part of a large business electricity bill.

Understanding how they’re set, what drives them, and whether your site is on an appropriate tariff can help you identify opportunities to better manage your energy costs.

Who sets network tariffs?

Network tariffs are set by the electricity distribution network that services your site.

The Australian Energy Regulator (AER) regulates network businesses in the National Electricity Market and sets how much revenue they can recover from customers over a five-year regulatory period. Network tariffs can still be adjusted each year within that period.

Networks then develop tariff structures to recover their approved costs. This means your network charges aren’t set by your electricity retailer.

Depending on your billing arrangement, network costs may be passed through as part of your retailer bill or shown separately from your retail energy charges.

How is your network tariff determined?

There isn’t one standard network tariff for every business.

The tariff applied to your site can depend on factors such as your location, connection or customer type, electricity usage and demand profile, and meter type.

These factors help determine which tariff structure applies to your site and how your network charges are calculated.

What charges make up your network tariff?

Depending on your site and tariff, network charges can include several components:

• Consumption charges: Based on the amount of electricity your site consumes, measured in kilowatt-hours (kWh).  

• Demand charges: Some tariffs include charges based on the highest level of electricity your site draws from the network during a set measurement period. These are generally measured in kilowatts (kW) or kilovolt-amperes (kVA).  

• Fixed charges: Some network costs are charged at a fixed daily rate, regardless of how much electricity your site uses.  

• Loss factors: These account for electricity lost as it travels through the network to your site and can affect your overall electricity costs.  

The exact charges and how they’re calculated will depend on your network, location, connection, and tariff structure.

Can your business negotiate its network tariff?

Generally, network tariffs themselves aren’t negotiated in the same way as electricity retail rates.

But that doesn’t mean your business has no control over its network costs.

The first step is understanding whether your site is on an appropriate tariff and what behaviours are driving the charges. A Network Tariff Review can help identify whether the tariff applied to your site still suits how it uses energy.

Depending on your operations and tariff structure, opportunities could include reducing peak demand, shifting some electricity use to different periods, or reviewing whether another available network tariff is more suitable for your site’s consumption profile.

Not every business will have the same options. The potential value depends on how your sites operate and the tariff structures available through the relevant network.

How Zembl can help

Network tariffs are only one part of your energy costs. At Zembl, we help large businesses understand the bigger picture.

Network Tariff Reviews are one of the value-added services available to Zembl’s large-business customers for an additional broker fee. Where this service is included, we conduct reviews at tender and on an ongoing basis to check whether the tariff applied to each site remains appropriate for how it uses energy.

And the savings can add up. In a sample of 148 sites reviewed between March and September 2025, Zembl identified network tariff mismatches representing $648,000 in potential annual savings, an average of $4,379 per site reviewed^. The 148 sites are a sample from that period, not the total number of sites Zembl reviews.

Network Tariff Reviews aren’t limited to contract renewal. They can also identify opportunities while your business is already locked into a commercial energy contract.

If your usage profile has changed since the tariff was assigned, or your site is on a structure that no longer suits how it uses energy, Zembl can identify the mismatch and advocate for a reclassification with your network distributor. You don’t need to wait until contract renewal to act.

Our Energy Experts can also help you make sense of your energy usage, demand, and costs, identify opportunities to improve energy efficiency, and secure competitive energy contracts through our retailer panel.

From procurement to energy intelligence and efficiency, we help you take greater control of your energy spend.

_{^ Based on Zembl's Australian commercial and industrial customers and represents annual potential energy savings through Zembl's annual Network Tariff Review service from 1 March 2025 – 30 September 2025 including GST. Savings vary based on individual site usage, network tariff structure, and distributor pricing.}