A standard Time of Use tariff is designed to be cost-reflective – meaning that the rates charged for usage at peak times are generally much higher than the rates charged at off-peak times. This reflects the underlying reality in the wholesale market, where prices are higher at peak times.

Transitional ToU tariffs were deliberately designed to reduce the disparity between peak prices and off-peak prices, by making the peak rate lower and compensating by making the off-peak and shoulder rates higher than they would otherwise be.

This has the effect that a consumer who has come across from a single rate tariff—where all consumption is billed at the same rate, no matter what time of consumption—is less likely to experience the bill shock that could otherwise occur if they were to consume too much energy at peak times.

Transitional ToU tariffs are now closed to new connections, but some households will still be on legacy Transitional ToU tariffs.

In general, under a standard ToU tariff, it's possible to achieve savings by time-shifting energy consumption away from expensive peak times and into the cheaper shoulder and off-peak times, thus minimising peak consumption.

These savings are less pronounced under a Transitional ToU tariff, because the price difference between the peak and non-peak rates is lower, or there may be no difference in the price applied to each tariff component.