In contrast to both flat rate and time of use pricing, which are based on kWh usage, a demand tariff differs in that it is based on the intensity of the electricity usage – for instance, if you were to have multiple appliances on at the same time – during pre-defined ‘peak windows’.
The windows are set by reference to the usual peak network demand. A customer’s demand charge is reset after a defined period, like a month. This is a relatively new plan structure in Australia and is mainly offered in South Australia and Victoria. It also requires a smart meter to be installed.