Is your business paying too much for electricity?
For most businesses, the energy bill is often an overlooked expense. However, with energy prices set to increase significantly over the coming decade many savvy business owners are looking for ways to cut running costs. To begin with, most businesses are actually being overcharged for their electricity and don’t realise.
To examine how a business can save money on the price of electricity, let’s first look at how the electricity market in Queensland works. Historically, the electricity supply industry was regulated by the state government who owned the infrastructure and set the supply rates. Now that the industry has been deregulated, the infrastructure still belongs to the state but the actual supply of electricity is an open market.
In a way, an electricity supplier can be thought of as a middle man, the electricity is supplied by the generator and is sent through the infrastructure to your business – the supplier just facilitates this transaction. The supplier pays a supply charge to Energex or Ergon (depending on where you are located).
Due to the competitive nature of electricity supply, many suppliers will offer discounted rates to capture your business. It’s worth comparing rates with different suppliers to make sure you are getting the best deal possible. However, comparing rate is only really the low hanging fruit.
Some businesses may be able to significantly reduce their electricity bill by directly negotiating an open-contract for electricity supply.
If your business uses more than 100MWh per year – more than $1500 per month, then you are able negotiate a better rate for supply. Most medium sized business operations are well beyond this point and may see savings in the range of 20-50 percent on their power bill.
The only flipside to this is that under an open electricity contract, you will have to pay peak demand fees and this may mean that your power bill will cost more!
A qualified energy analyst will be able to determine whether it is worthwhile for your business to switch over to an open contract.
To really maximise your energy savings you should also have an energy consultant create a ‘peak demand strategy’ for your business. By actively managing your peak demand, you will be able to see a further increase in your savings.