Most homeowners think about saving on hot water by choosing a more efficient system. Not many think about the tariff it runs on. But yes, a different electricity tariff can cut your hot water bills, and for some households, it’s one of the easiest changes to make.
If you have an electric hot water system on a general-use rate, switching to a cheaper tariff could reduce running costs by $200 to $500 a year without changing the system at all.
Water heating makes up around 15% to 30% of the average Australian household’s energy bills. If you’re paying peak electricity rates every time the element kicks in, that’s a significant chunk going to waste. It won’t work for every home or every system, but for the right setup, the tariff is worth a look.
A tariff is how your electricity retailer charges you for the power you use. Different tariffs apply different rates depending on the time of day, how the appliance is metered, or how much electricity you’re drawing at once.
Your tariff is separate from your broader electricity plan, which may also include daily supply charges and feed-in rates for solar panels. Some electricity plans combine a time-of-use structure with a solar feed-in tariff, which can work well if the hot water system or heat pump can be scheduled to run during the solar generation window.
The tariff is the usage rate you pay per kilowatt-hour. For hot water, that rate determines whether your system heats water at the cheapest available rate or at the same rate as everything else in the house.
Single rate (flat rate): The same usage rate applies regardless of when electricity is used. Simple, but it doesn’t offer much opportunity to reduce water heating costs by shifting when the system runs.
Time-of-use: Rates vary by time of day. Peak periods are more expensive, off-peak periods are cheaper, and shoulder rates sit in between. Households that can shift major electricity use away from peak times can benefit, including by scheduling hot water heating or boosters to run during cheaper periods.
Controlled load: The tariff most directly relevant to electric hot water systems. The system connects to a dedicated circuit or separate meter, and power is supplied at a discounted rate during set periods, typically overnight. This is one of the most cost-effective options for electric storage hot water because the system heats a full tank during the cheap window and stores it for use throughout the day.
Economy tariff: A lower-cost appliance tariff available in some areas for eligible systems. Availability varies by state, retailer and distributor.
Demand tariff: Charges are partly based on peak electricity demand. Less common for residential hot water, but it’s worth understanding if you have multiple high-draw appliances running at the same time.
Yes, in the right circumstances. The biggest opportunity is with electric storage hot water systems on a general usage rate. Peak electricity rates can exceed $0.50 per kilowatt-hour in some states and networks, while controlled load rates are often significantly lower. However, the exact figures vary by state, distributor, and retailer. That gap adds up across a year of daily water heating.
A cheaper tariff doesn’t automatically mean a cheaper bill, though. If the system is old, poorly insulated or heating more water than the household uses, the tariff change won’t fix those problems. Off-peak rates are genuinely lower, but they only deliver their full benefit when the system and tank are matched to the heating window. A tariff review is one part of the picture, not the whole answer.
They are best suited to off-peak and controlled-load energy tariffs. Because they store heated water in a tank, they can heat water during a cheaper overnight window and hold it for use throughout the day. An energy-efficient, well-insulated storage tank loses less heat between heating windows, which makes the lower off-peak rates go further. You also must consider the size of your tank; the system may run out of hot water before the next heating period.
Use electricity but are significantly more energy efficient, using around a third of the energy of a standard electric water heater. Heat pump systems can be programmed to run during cheaper tariff periods or during solar energy generation hours. Tariff timing still affects running costs even with a more energy-efficient system. If the current electric system is old and expensive to run, switching to a heat pump hot water system may save more on energy bills than a tariff change alone.
These units can still be affected by electricity tariff choices. The solar collector handles most of the water heating under good conditions, but the electric booster takes over during cloudy weather, in winter, or during periods of higher usage. If the booster is running at peak rates, the electricity bill reflects it. Scheduling the booster to align with off-peak times or with daytime solar energy generation can meaningfully reduce running costs. In sunny climates, a well-configured solar hot water system with the booster on the right tariff can be one of the most cost-effective setups available.
Are largely unaffected by electricity tariffs. Gas hot water systems run primarily on gas, so the electricity tariff has minimal impact on costs. Instantaneous electric systems heat on demand and aren’t suited to controlled load tariffs because they can’t be restricted to set heating windows. For these systems, usage habits and gas plan choice matter more than changes in electricity tariffs.
Start with your electricity bill. Look for:
Check the meter box or switchboard for a separate hot water meter or circuit. If none of that is present, your system may be on a general usage rate, and it’s worth asking your retailer what’s available.
Some tariff changes require a meter upgrade, which adds upfront cost, so consider that before assuming the switch pays for itself straight away.
| Tariff Type | How It Works | Best Suited To | Hot Water Benefit | Watch Out For |
| Single rate | Same rate all day | Simple household usage | Easy to understand | No chance to shift heating to cheaper periods |
| Time-of-use | Rates vary by time of day | Homes that can shift usage | Can reduce costs if heating runs during off-peak times | Peak rates may be higher than a flat rate |
| Controlled load | Separate discounted tariff on a dedicated circuit | Electric storage hot water | Often the cheapest rate for water heating | Heating windows are restricted |
| Economy tariff | Lower-cost tariff for eligible appliances | Eligible hot water systems | Can reduce running costs | Availability varies by state and retailer |
| Demand tariff | Partly based on peak demand | Some households and businesses | May suit certain usage patterns | Simultaneous high-draw appliances can increase costs |
Off-peak and controlled load are often used interchangeably, but they’re not the same thing. Off-peak refers to cheaper periods under a time-of-use plan. Controlled load is a dedicated appliance tariff with its own circuit. Time-of-use applies to the broader household unless the hot water system is separately metered.
A tariff review is most likely to help if:
Take a couple with a 250L electric storage system on a continuous tariff. Switching to a controlled load could put a decent dent in their bills. A family of five with the same tank is a different story. If the heating window isn’t long enough to refill the tank, they’ll run out of hot water before dinner. And if you’ve got solar, timing your water heating to run during peak generation hours can wipe out that electricity cost almost entirely.
Before switching to a cheaper hot water tariff, make sure your tank is large enough to meet your household’s needs between heating cycles. A lower rate won’t feel like a saving if you’re running out of hot water by 4 pm.
A cheaper tariff won’t solve everything. An old system that loses heat quickly will still cost a lot to run, regardless of the rate it’s on. And if you’re calling a plumber every few months, it’s probably time to weigh up repair costs against the cost of replacing the unit.
A heat pump or solar hot water system will generally save you more over the long run than any tariff change will. Heat pumps in particular use a fraction of the electricity of a standard electric system, so the rate you’re paying per kilowatt hour becomes far less of an issue.
A better electricity tariff can reduce hot water running costs, but it’s not the whole story. The right answer depends on your system type, age, tank size and household usage. Same Day Hot Water Service can help you determine whether a tariff review, a system upgrade, or both make sense for your home. Call 1300 721 996 or get in touch through our website.
Yes, for the right setup. It works best for electric storage systems that can heat a full tank during cheaper off-peak periods. For a well-matched system and household, savings of $200 to $500 a year are realistic.
A controlled load tariff is a separate electricity rate for a specific appliance, usually an electric hot water system, connected via a dedicated circuit. Power is discounted during set periods, typically overnight. It’s one of the most cost-effective options for electric storage water heaters.
Check your electricity bill for controlled load, off-peak hot water, dedicated circuit, economy tariff, Tariff 31 or Tariff 33 (QLD-specific terms). A separate hot-water usage line at a lower rate is a good sign. If unsure, ask your retailer directly.
You might, if the tank is undersized or usage exceeds what the heating window can cover. If the tank regularly runs empty before the next heating period, the setup needs to be reviewed— whether that’s a larger tank, adjusted usage habits, or a different tariff arrangement.
If the system is reliable and correctly sized, a tariff review is a good first step. If it’s old, inefficient or frequently breaking down, replacement likely delivers more long-term value. Our guide to saving money on your hot water system runs through the full comparison.