Gas Versus Electricity: Where the Money Actually Lives in Each Bill

Most small businesses get two energy bills and treat them as one problem called "energy costs". Understandable, but wrong in a way that costs money, because the two bills are built on completely different logic. Electricity charges you for when you use it. Gas charges you for how much you use in a period. Once you see that split clearly, you stop pulling the wrong levers.

Here is how each fuel actually prices a small business in NSW, Victoria, Queensland, South Australia, Tasmania and the ACT, and what follows from the difference.

Electricity: the clock is the tariff

On many small business electricity plans, the price of a kilowatt hour depends on the hour. Time-of-use tariffs split the day into windows (commonly labelled peak, shoulder and off-peak) with a different rate in each. The same machine, run at a different time of day, costs a different amount to run. That is the entire premise.

Then there are demand charges, which appear on many business plans and confuse nearly everyone the first time. A demand charge is not keyed to your total usage. It is keyed to your single highest usage window in the period: the moment when the most equipment was drawing power at once. One busy half hour when the ovens, the air conditioning and the dishwasher all peaked together can set a charge that applies across the whole billing period. Total consumption can stay flat while the demand line moves a great deal, purely on how bunched your usage was. Demand charges explained goes through the mechanics and what can actually be done about them.

So the electricity bill has two time-shaped questions baked into it: when do you use power, and how much do you ever use at once. Both are things a business can sometimes change without using a single kilowatt hour less. Staggering equipment start-ups, shifting a flexible load into a cheaper window, avoiding the everything-on-at-once moment: these are real levers, and they only exist because the tariff is built around the clock.

Gas: the meter total is the tariff

Standard small business gas plans have no time-of-day dimension at all. Run the boiler at 3 am or 3 pm and the megajoules cost the same. What gas plans care about is volume across the billing period, and they express that through structure.

The first structure is stepped rates: your usage in a period is charged in blocks, with the first block of megajoules at one rate and later blocks at others. Which blocks your usage reaches determines which rates are actually doing the work on your bill. Business gas, explained covers the rest of the bill's anatomy.

The second structure, on some tariffs, is seasonal pricing: a winter rate and a non-winter rate, reflecting the fact that gas demand across the market swells when the heating goes on. For a business whose gas load is winter-heavy, the seasonal shape of a plan can matter as much as the rates themselves.

That is the whole machine. No peak windows, no demand charges, no reward for running at midnight. Volume in, blocks and seasons applied, bill out.

What follows from the difference

Shifting hours helps one bill and does nothing for the other. Moving flexible electricity loads into cheaper windows is a real saving on a time-of-use plan. Doing the equivalent with gas achieves nothing, because no standard small business gas tariff cares what time it is. If someone has ever advised you to "run things off-peak" as a blanket energy strategy, that advice was an electricity strategy wearing an energy costume.

Volume and timing of volume are the gas levers. Cutting winter gas consumption attacks the fuel where it is priced, and on a seasonal tariff it attacks the expensive season. And because stepped rates reset each billing period, how your production falls across periods interacts with the blocks: a business with lumpy, batched gas usage and one with the same annual total spread evenly can land in different blocks in different periods, and pay differently for identical annual volume. That is not a trick to exploit so much as a reason to compare plans on your actual billing pattern rather than an annual average. For premises whose volume lives deep in the later blocks, the heavy-user guide takes this further.

Supply charges sit on both bills but weigh differently. Both fuels charge a fixed daily supply charge simply for the connection. For a heavy user, it fades into insignificance next to usage. For a low-usage site (a small office with gas only for a hot water unit, say) the supply charge can be a large share of the gas bill, at which point the comparison question quietly changes from "who has the best rates" to "who has the best fixed charge", and occasionally to "is this connection earning its keep at all". Same line item, completely different importance, depending only on your volume.

The two bills need separate diagnoses. This is the practical conclusion. The electricity bill is diagnosed by asking when you use power and how peaked your usage is. The gas bill is diagnosed by asking how much you use per period, which rate blocks that reaches, and how winter-weighted you are. Averaging the two into one "energy cost" number destroys exactly the information you need to reduce either.

The conversion trap

One honest technical note, because it comes up constantly: 1 kilowatt hour equals 3.6 megajoules of energy content. That is physics and it is not in dispute. What it is not is a way to convert one bill into the other. Appliance efficiency differs between fuels and between individual appliances, and the tariff structures described above mean the same delivered energy is priced through entirely different machinery. The identity is useful for building intuition about magnitudes, and useless for concluding which fuel is cheaper for your business from the bills alone. Anyone converting your gas bill into "equivalent electricity" with one multiplication is skipping the part where the answer lives, as gas megajoules explained sets out.

Two markets, one method

The good news is that both markets are published. Australian retailers make their plan data public through the Consumer Data Right, gas and electricity alike, which means both of your bills can be priced against every retailer in your state rather than a shortlist.

That is what we do at Fix Your Bill: two separate diagnoses, one method. We read each bill, take your real usage with its real shape (the hours and peaks for electricity, the volumes and seasons for gas), and price the entire market in your state against it. Not the retailers on a panel. All of them, on your numbers, fuel by fuel. Because the levers are different, the comparisons are run separately, and because the data is public, neither comparison has to stop at whoever paid to be included.