Power Factor Penalties in Australia: A State by State Guide to kVA Demand Tariffs

On This Page:

• Introduction
• How Power Factor Creates a Hidden Charge on Your Bill
• New South Wales
• Ausgrid (Sydney, Central Coast, Hunter)
• Endeavour Energy (Western Sydney, Blue Mountains, Southern Highlands, Illawarra)
• Essential Energy (Regional NSW)
• Victoria
• CitiPower (Melbourne CBD and Inner Suburbs)
• Powercor (Western Melbourne, Western and Central Victoria)
• Jemena (Northern and Western Melbourne)
• AusNet Services (Eastern and North-Eastern Victoria)
• Victoria Summary
• Queensland
• Energex (South-East Queensland)
• Ergon Energy (Regional Queensland)
• South Australia
• SA Power Networks
• Western Australia
• Western Power (South-West Interconnected System)
• Horizon Power (Regional WA)
• Tasmania
• TasNetworks
• Australian Capital Territory
• Evoenergy
• The National Trend: More Networks Are Moving to kVA Billing
• How to Check Whether Your Business Is Affected
• Check your electricity bill
• Use our PFC savings calculator
• Book a power quality audit
• Get an Assessment for Your Site Today
  

Before looking at each network, it helps to understand why billing units matter.

When a network charges demand in kW, they are measuring real power only. Your power factor does not affect the demand charge because reactive power is excluded from the measurement.

When a network charges demand in kVA, they are measuring apparent power, which includes both real power and reactive power. If your power factor is low, your kVA demand is higher than your kW demand, and you pay for the difference.

Here is a simple example: 

A site drawing 375 kW of real power with a power factor of 0.75 registers demand of 500 kVA. 

That same site with a power factor of 0.98 registers demand of 383kVA. Under kVA billing, the business with poor power factor pays for 117 kVA of demand it does not need.



The lower your power factor, the wider the gap. And the wider the gap, the stronger the business case for installing power factor correction equipment.

Ausgrid serves Sydney's CBD, eastern suburbs, inner west, north shore, northern beaches, Central Coast, and the Hunter region. For large low voltage business customers (more than 40 MWh annual consumption), Ausgrid applies a capacity charge measured in kVA.

The capacity charge is based on a rolling 12-month maximum. This means your billable demand is the highest half-hourly kVA reading recorded between 3pm and 9pm on working weekdays over the previous 12 months. A single demand spike in January will affect your bills for the following 12 months.

This rolling structure makes power factor correction valuable for Ausgrid customers. Every reading that captures a lower demand figure immediately reduces your charges, while also preventing a high reading from dictating your costs for the next 12 months.



Here is the latest pricing (excluding GST) from Ausgrid for 2025-26. Capacity charges are measured in cents per kVA per day.

What could this mean for your business? 



A large LV business (EA305) with 500 kVA peak demand pays roughly $8,195 per month in network capacity charges alone. Reducing demand by 100 kVA through PFC saves approximately $1,639 per month or $19,668 per year in network charges.

Endeavour Energy serves western Sydney, the Blue Mountains, Wollongong, Nowra, and surrounding areas. Large business customers are charged demand based on kVA, with tariff structures aligned to time-of-use demand periods.

Like Ausgrid, demand measurement considers peak periods during working weekday afternoons and evenings. Businesses in Endeavour Energy's network area with motor-heavy loads, manufacturing equipment, or large HVAC systems are likely candidates for PFC savings.



The table below is an indicative price schedule for the 2026 financial year from Endeavour Energy. All prices exclude GST. Demand is measured in cents per kVA per day, with seasonal high-season (HS) and low-season (LS) rates.

Essential Energy covers regional and rural New South Wales, from the coast to the western plains. Their network serves agriculture, mining, and regional manufacturing businesses.

Large customers on Essential Energy's network face demand charges, and the network has transitioned toward kVA-based measurement. Regional businesses often face additional challenges from long feeder lines causing voltage drop, which compounds power quality issues beyond power factor alone.



Power Factor Correction for SunRice is a prime example - they now enjoy savings of around $70,000 per annum after installing Quality Energy’s custom designed 900 kVAr power factor correction equipment. 

Victoria was one of the first states to move to kVA demand billing for large business customers. All five Victorian DNSPs use kVA as the demand measurement unit for their large customer tariffs.

CitiPower serves Melbourne's central business district and inner suburbs, including some of Australia's largest commercial buildings and office towers.

Large low voltage customers (demand above 120kVA) are charged on a rolling 12-month kVA demand basis, measured in 15-minute intervals. CitiPower also applies a summer incentive demand charge during specific afternoon periods, which creates a seasonal peak pricing overlay on top of the rolling demand charge.

The minimum chargeable demand for large low voltage customers is 120kVA. Even if your actual demand drops below this, you will be billed for 120kVA.



CitiPower's pricing documents explicitly note that customers installing power factor correction equipment should be aware of their obligations under the Victorian Electricity Distribution Code to keep harmonic distortion within prescribed levels. This means PFC installations in the CitiPower network should include detuning reactors or harmonic assessment as part of the design.

Powercor covers Melbourne's outer western suburbs and extends across central and western Victoria. Their tariff structures mirror CitiPower's (the two networks are operated by the same parent company), with kVA demand charges and a 12-month rolling demand window for large customers.

The same minimum chargeable demand of 120kVA applies. The same summer incentive demand charge applies. And the same harmonic compliance obligations apply to businesses installing PFC equipment.

Both CitiPower and Powercor use the same pricing structure:

Demand measured in kVA over 15-minute intervals, charged on a 12-month rolling maximum (7am–7pm workdays). Minimum chargeable demand: 120kVA (LV), 500kVA (HV), 5,000kVA (sub-transmission).



These are approximate figures for 2025/26, please look at your electricity bill, or reach out to CitiPower or Powercor for more information:

CitiPower and Powercor have a demand reset provision tied to PFC installation. If you install PFC equipment and provide a Certificate of Electrical Safety, they will reset your 12-month rolling demand from the date of commissioning. This effectively lets businesses see immediate bill savings rather than waiting for the old peak to roll off over 12 months.

Jemena serves Melbourne's northern and western suburbs, including major industrial precincts in Tullamarine, Campbellfield, and surrounding areas.

Large business customers on the Jemena network are subject to kVA demand charges. Jemena's tariff structures include time-of-use demand periods, with demand measured during designated peak windows.



The industrial nature of many sites in Jemena's coverage area (manufacturing, warehousing, cold storage) means power factor issues are common.

AusNet Services covers Melbourne's outer eastern suburbs and extends into the Gippsland, north-eastern Victoria, and parts of regional Victoria. Their network serves a mix of suburban, agricultural, and industrial customers.



Large business tariffs include kVA demand charges with similar rolling demand structures to other Victorian networks. AusNet's regional coverage means some customers face the additional challenge of supply quality issues related to network capacity in rural and semi-rural areas.

Victoria's consistent use of kVA billing across all five networks, combined with 12-month rolling demand windows, makes the state one of the strongest markets for PFC investment in Australia. A demand spike on any Victorian network locks in increased charges for a full year. PFC prevents those spikes from occurring.



When CitiPower moved to kVA-based billing, businesses that had previously been billed in kW saw immediate increases in their demand charges. The University of Melbourne is one example of an institution that needed to address power factor once kVA billing exposed the cost of reactive power.

Queensland has two distribution networks, both operated by Energy Queensland.

Energex serves Brisbane, the Gold Coast, Sunshine Coast, and surrounding areas in South-East Queensland. This is one of Australia's largest network areas by customer numbers.

For large business customers (consumption above 100MWh per year), the default tariff is the Large Time of Use Demand and Energy tariff, which uses kVA as the demand measurement unit. Demand is measured as the single highest 30-minute kVA reading during the month.

Unlike Victorian networks, Energex uses monthly demand rather than a 12-month rolling window. This means your demand charge resets each month based on the peak demand recorded in that billing period. While this reduces the long-term penalty of a single demand spike, it also means businesses need to manage their power factor consistently every month.

Energex's demand charges include both peak and off-peak demand components. Peak demand is measured during weekday afternoon/evening windows, while off-peak demand applies at other times. Both are measured in kVA.

Here’s what it looks like: 



Demand measured as $/kVA/month based on the single highest 30-minute peak each month.

Ergon Energy Network covers regional Queensland, from Toowoomba to Cairns and everywhere in between. This is one of the largest network areas in Australia by geographic coverage.

Large business customers on Ergon's network are also charged demand in kVA by default under the Large Time of Use Demand and Energy tariff. The tariff structure mirrors Energex's, with monthly kVA demand measurement.



Regional Queensland businesses in mining, agriculture, food processing, and manufacturing are common candidates for power factor correction. Ergon's regional network also features seasonal demand tariffs for some customer classes, with higher demand charges during summer months (December to February) when network capacity is most constrained. Their pricing mirrors Energex, as shown in the table above.

SA Power Networks is the sole distributor in South Australia, covering metropolitan Adelaide and all regional areas. South Australia has some of the highest electricity prices in the country, which amplifies the cost of poor power factor. They classify their business customers as:



• Small Business: 0-40,000 kWh per annum
• Medium Business: 40,000 - 160,000 kWh per annum
• Large Business: 160,000+ kWh per annum

Their tariff structures are so complex they need a 77 page PDF to explain it. You can download it here. Learn more about our power factor correction services in Adelaide.

Western Power operates the South-West Interconnected System (SWIS), covering Perth, the south-west corner of WA, and extending to Kalgoorlie. Western Australia's electricity market operates independently of the National Electricity Market.

Western Power's tariff structures for business customers include demand components. The demand measurement and billing approach differs from the east coast networks due to WA's separate regulatory framework under the Economic Regulation Authority rather than the AER.



Businesses in the SWIS area are subject to demand charges through their retailer (commonly Synergy for regulated customers), and the demand component of the tariff considers peak usage periods.

Horizon Power serves regional Western Australia, including the Pilbara, Kimberley, and Goldfields. Many customers in these areas are mining or resource sector businesses with significant electrical loads.



Demand charging structures vary by region and customer class. Mining operations with large variable loads (crushers, conveyors, processing equipment) often face substantial demand charges and power quality challenges.

TasNetworks is the sole distribution network operator in Tasmania, serving the entire state. Tasmania's electricity market benefits from significant hydroelectric generation, but businesses still face demand-based network charges.



Large business customers are charged demand on their TasNetworks tariff, with structures that have progressively moved toward more cost-reflective pricing.

Evoenergy (formerly ActewAGL Distribution) serves the ACT and surrounding areas, including Queanbeyan. Large business customers on the Evoenergy network face demand charges as part of their network tariff structure.

The direction is clear. Australian DNSPs are progressively moving from kW demand billing (which ignores power factor) to kVA demand billing (which penalises it). This transition has already happened across Victoria, Queensland, and large parts of NSW.

For businesses that have not yet been affected, the shift to kVA billing is a matter of when, not if. Installing Power Factor Correction equipment before your network transitions to kVA billing means you avoid the sudden bill increase that catches many businesses off guard. 

Quality Energy has seen this pattern repeatedly: businesses that were unaware of their poor power factor discover the problem only when their network moves to kVA billing and their demand charges jump overnight. Our post on what power factor correction is and how it can help your business explains our custom made equipment in further detail.

Three steps will tell you whether the power factor is costing your business money.

Look for demand charges listed in kVA (not kW). If your bill shows kVA demand, your power factor is directly affecting what you pay. If you are unsure how to interpret your bill, our guide to reading your commercial electricity bill for power quality issues explains what to look for.

Our free calculator lets you estimate how much you could save by improving your power factor, based on your network operator's indicative demand tariff rate. 

A power quality audit provides an exact answer. Quality Energy installs monitoring equipment on your switchboard for 7 to 14 days, capturing your real power factor, demand profile, and harmonics across all operating conditions. The audit report includes a precise savings calculation, system specification, and quote for custom manufactured PFC equipment. We even credit you the cost of the audit when you go ahead. 

This guide provides a general overview of how each network structures its demand tariffs, but tariff rates change annually (each July) and your tariff class, connection type, and load profile will determine the exact impact on your business.

Quality Energy has installed power factor correction equipment for industries across Australia and New Zealand. From commercial buildings in Melbourne's CBD to manufacturing plants in regional Queensland and mining operations in South Australia, we will tailor your power factor correction unit to your exact needs. Each installation starts with a power quality audit that captures the data needed to design the right system for your site.



Get in touch today and find out how much your business is overpaying on demand charges, and how quickly we can fix it.