Review your energy contract

Depending on your business size and actions, energy costs can take up a large part of your finances. One way to save on your energy costs is to review your current contract and make sure it’s working for your business.

Your usage data can help you discuss your circumstances with your energy providers and negotiate a better deal to suit your needs. Alternatively, you could use that information to help you find a better deal with another supplier.

Energy contracts

Depending on the size and location of your business you can choose one of the various energy contract types, including:

  • Standing offer contracts
    These are basic contracts with minimum terms and conditions set by law. They set out your options, rights and the price of the supply of energy. These contracts usually suit smaller energy users. They are sometimes known as standard retail offers.
  • Market retail contracts
    Market retail contracts are between you and your energy retailer. They still include minimum terms and conditions set by law, however they are more flexible than standing offer contracts. These contracts also feature discounts and incentives, however be aware of any extra terms and conditions, such as fixed terms and exit fees. These contracts mostly suit businesses with lower energy use.
  • Market contract (negotiated)
    Large energy users may wish to choose a market contract where you negotiate all aspects of the contract. The contract is usually based on market prices, which means you may be more exposed to price changes. However, these contracts can save you money if you understand your energy needs and actively manage your usage.

Negotiate your energy contract

It’s possible to negotiate a better deal from your energy company if you prepare and understand what you can negotiate on.

Here are some tips to getting the best price for your energy bill:

  1. Provide detailed usage data
    The more your energy provider knows about your current usage, the less likely they are to charge you a premium. Aim to give them at least 12 months of data showing your energy use for each half-hour period. This will show them your peak, shoulder and off-peak usage and your maximum demand, which may influence the network charges that you pay. You can obtain this data by contacting your energy provider.
    See our page on Understanding your energy use before you start.
  2. Look at your contract carefully
    For smaller businesses on market retail contracts, ask your retailer about terms and conditions. Pay attention to details on pricing and any discounts with an offer, such as pay on time discounts. If you negotiate your contract, review it before making any changes to your energy use or contract. While reviewing your contract, it’s important to look for any special clauses. Some contracts include a ‘take-or-pay’ clause that means if you use less than a minimum amount of energy you still have to pay. Contracts and clauses vary between energy retailers, so it may be worth doing some research or talking to an energy broker to discuss your options.
  3. Shop around
    You can easily do an online search to see how your energy contract compares to similar businesses. You can also consider using an energy broker or third party to get a better deal. When you’re shopping around, make sure you consider any broker or exit fees in your comparison. Search the Energy Made Easy website to compare electricity and gas offers.
  4. Go to market at the right time
    If you negotiate a contract, you don’t have to wait until the end of your contract to get a better deal. Energy prices can change throughout the year, so consider negotiating on a low priced day or when the market prices are going down. If your contract has a fixed period, make sure you consider any cancellation or exit fees in your calculations.
  5. Choose the best contract period
    The length of your energy contract is another way you can save money. By understanding the market you can adjust your market contract period to suit. In a rising market, where current prices are cheaper than future prices, it may be better to choose a longer contract. In a decreasing market it may be better to select a short period, with the aim of buying cheaper in the future.
  6. Plan for the future
    When negotiating your contract, it’s important to consider any major changes you plan for your business. If you plan to expand your operations, consider a shorter contract until you have a better idea of the energy you’ll need.

Energy finance options

Despite all the benefits, it’s often difficult to find money to invest in energy saving equipment. However, there are a range of finance options to help fund your energy management activities:

Leasing

Leasing new equipment reduces the up-front cost of switching to more energy efficient equipment. A lease may also allow you to upgrade as technology improves, switch to another more suitable option, or purchase the item at the end of the lease.

If you’re considering leasing solar panels or entering into a power purchase agreement that includes the purchase of any electricity you generate, check:

  • the financing costs
  • requirements regarding the purchase price
  • whether it is a net or gross arrangement to ensure the deal meets your business needs.
  • Read the NSW Resources and Energy topic on choosing and installing solar panels.

On-bill financing

Some energy retailers offer on-bill finance. This is where the retailer provides you with the energy efficiency equipment in return for regular repayments added to your energy bill. Ownership is then transferred on the final payment of finance.

  • Contact your service provider to see if they offer this service.

Energy performance contracts

Energy performance contracts are common in the commercial building sector. Energy service companies guarantee to reduce your energy bill by:

  • finding potential savings in a building’s operations
  • commissioning and funding a retrofit of the building
  • using the energy saved to fund the upfront costs.

Grants

Energy grants are open to businesses looking to improve their energy efficiency. Eligibility may vary depending on the size of your operations.

Some state or territory governments also offer energy programs for local businesses. These provide an energy audit and a rebate or refund for eligible energy upgrades.


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