Commercial energy pricing structures are usually either fixed (sometimes called all-in) pricing or pass-through pricing. Fixed pricing is designed for budget certainty because most costs are bundled into a single set of rates, while pass-through pricing separates charges so some components can move over time, which can be cheaper but less predictable.
In practice, the best structure depends on your usage profile, your tolerance for bill volatility, and whether your sites are exposed to demand charges, time-of-use peaks, or large network cost swings. This guide explains how business electricity and gas prices are commonly built up in Australia, what fixed vs pass-through electricity means, and what to ask before you sign.
Quick answer: Fixed vs pass-through pricing in business energy
Fixed (All-in) pricing
- What it is: Your retailer gives you set rates, usually cents per kWh (and potentially demand and supply charges), that stay the same for the contract term.
- What it includes: Often bundles energy, retail margin, and an allowance for network and market movements.
- Best for: Businesses that prioritise budgeting and stable invoices.
Pass-through (unbundled) pricing
- What it is: The contract locks in some components (usually the retailer energy rate and margin), while other components are charged “at cost” as they change (for example, network charges and market fees).
- What it includes: Separate line items for network tariffs, AEMO market charges, losses, and other regulated costs.
- Best for: Sophisticated users with good interval data, or portfolios where transparency and cost-to-serve accuracy matters.
Why commercial energy prices are more complex than residential
Many Australian businesses, especially C&I (commercial and industrial) users, don’t buy energy on a simple bundled rate. Retailers often quote only the components they control, while regulated and network-driven charges can be charged separately. That is one reason two offers with the same “c/kWh” can produce very different total bills.
Common drivers of complexity include:
- Interval metering and load shape: when you use energy matters, not just how much you use.
- Demand charges: a single short peak can materially affect costs for an entire month.
- Network tariff structures: distributors set tariffs that can change annually, often from 1 July.
- Market and environmental scheme costs: various regulated costs may be bundled or passed through depending on your contract.
What makes up a business electricity price in Australia
Whether your contract is fixed or pass-through, most electricity bills are built from the same building blocks. The difference is how those blocks are packaged, and who holds the risk if a component changes.
- Energy (wholesale) component: the cost of purchasing electricity, usually hedged by retailers.
- Retail costs and margin: billing, credit risk, customer service, and retailer margin.
- Network charges: distribution and transmission charges based on your network tariff.
- Market charges: fees associated with operating the market (for example, AEMO-related charges).
- Loss factors: adjustments that reflect electrical losses between generators and your meter.
- Environmental scheme costs: costs retailers incur to meet scheme obligations (how these appear varies by contract).
- Metering charges: metering and data services, sometimes a daily charge.
Tip: When comparing commercial electricity offers, ask whether quotes are “all-in” or “plus pass-throughs”, and request a total cost estimate using your interval data, not just a headline rate.
Commercial gas pricing structures in Australia
Gas contracts can be simpler on the surface, but pricing still varies by structure and network. You may see:
- Commodity gas rate: the gas supply component, often quoted in $/GJ.
- Delivery and network charges: depending on jurisdiction and meter type, some charges may be bundled or itemised.
- Metering and service fees: fixed daily or monthly charges.
- Seasonality and capacity exposure: for some larger users, pricing and risk can be influenced by winter demand and capacity constraints.
If you are comparing gas pricing structures across multiple sites, the network region and pressure level can materially affect charges, even when the commodity price looks similar.
Table: Examples of fixed vs pass-through structures for electricity and gas
The table below uses simplified examples to show how the same site might be billed under different structures. These are not retailer quotes, they are illustrative so you can see what typically stays fixed and what can move.
Pros and cons of fixed pricing
Advantages
- Budget certainty: easier forecasting and cost control for finance teams.
- Less bill volatility: fewer surprises if network tariffs rise mid-term.
- Simpler comparison: fewer line items to reconcile.
Trade-offs
- You may pay a risk premium: retailers price in buffers for uncertainty.
- Less transparency: it can be harder to identify whether network or market charges are driving costs.
- Contract wording matters: some “fixed” deals still allow adjustments for specific pass-through events.
Pros and cons of pass-through pricing
Advantages
- Transparency: you can see what you are actually being charged for each component.
- Potentially sharper pricing: less bundling can mean lower margins and fewer buffers.
- Better alignment to cost drivers: useful for portfolios and energy management programs.
Trade-offs
- More volatility: network and market components can change, often annually or in response to regulated updates.
- Harder to compare: you need modelling to estimate total cost, not just a single rate.
- Requires active management: tariff reviews and bill validation become more important.
Key clauses to check in fixed and pass-through contracts
Before you accept an offer, confirm how each component is treated and what triggers a change. Common areas to review include:
- Pass-through schedule: exactly which costs are passed through and how they are calculated.
- Network tariff change process: what happens if the distributor changes your tariff class or rates from 1 July.
- Metering upgrades: whether advanced metering costs can be passed through.
- Load variation bands: what happens if you use materially more or less energy than forecast.
- Demand charge methodology: how peak demand is measured (interval length, peak windows, ratchets).
- Termination and move-out provisions: fees if you exit early or close a site.
How to choose the right structure for your business
Choose fixed pricing if you want stability
Fixed structures are often a fit when predictable monthly bills are a priority, or when you have limited internal capacity to manage energy actively.
Choose pass-through pricing if you can manage variability
Pass-through structures can suit larger users, multi-site portfolios, and organisations that want transparency and are comfortable managing network tariff exposure, demand risk, and market-driven line items.
Consider a blended approach
Some businesses use a blended procurement strategy, for example, fixing the energy component while passing through specific regulated charges, or staggering contract start dates across sites. The right approach depends on your governance, risk appetite, and reporting needs.
How Zembl helps businesses compare commercial energy pricing structures
Zembl helps Australian businesses compare electricity and gas offers from a panel of retailers and understand how each quote will work in the real world. That includes clarifying fixed vs pass-through electricity terms, checking pass-through schedules, and estimating total cost using your actual usage profile.
If you want support on tendering, tariff checks, or contract reviews, explore:
- Commercial energy solutions
- Commercial energy brokers
- More than energy procurement
- Do you need an energy broker?
- Commercial energy glossary (Electricity & gas terms explained)
Frequently asked questions
Is pass-through always cheaper than fixed?
Not always. Pass-through can be cheaper when network and market charges remain stable and your retailer margin is competitive. But if network tariffs rise, or if you have high demand peaks, total cost can be higher than expected. The right comparison is total annual cost, modelled from your interval data.
Can a “fixed” contract still include pass-throughs?
Yes. Some fixed deals are fixed only for energy rates, but still allow pass-through of specific regulated charges, metering changes, or government scheme costs. Always review the pass-through schedule and change clauses.
How often do network tariffs change?
For most networks, tariffs are updated annually, commonly from 1 July. If you are on a pass-through structure, those changes can flow directly into your bill. Even on fixed deals, tariff changes can influence future renewal pricing, and sometimes trigger reclassification if your load profile changes.
Does the structure differ by state?
Yes. Network tariffs and eligibility for certain market arrangements differ by distributor region and jurisdiction. For larger users, what can be negotiated and what is regulated can also vary. A market review using your site and meter data is the best way to confirm options.
What information do I need to compare offers properly?
At minimum, recent bills, NMI/MIRN details, and your current tariff. For larger sites, interval data (often 12 months) helps model demand and time-of-use exposure so offers can be compared on total cost, not just a headline c/kWh rate.
Next step: If you want an obligation-free comparison of your commercial electricity or gas contract structures and pricing, Zembl can review your bills and model options across retailers.
.svg)
.svg)
