What makes up your business energy bill?
As businesses sharpen their focus on costs, it may help to gain a better understanding of the different components that make up your electricity bill. This could help you to pinpoint important savings for your business.
In this article, we’ll break down a typical large customer bill for you, item by item, while offering some tips to lower your energy costs.
Retail charges on your energy bill offer the potential for cost savings.
Your retail charges are based on different time of use periods, as detailed in your contract. These are applied to your energy usage for the period. Periods of peak demand will incur the highest prices. You can potentially modify your business operating practices to limit your electricity consumption during peak times.
Environmental Schemes (Certificates)
On your energy bill, you will see environmental charges, such as LREC, SREC, VEEC, ESC or AEEC.
These Environmental charges relate to various legislated State and Federal government green schemes, which are designed to address national and state-based renewable energy and energy efficiency objectives. Schemes typically require retailers to acquire and surrender certificates created as a result of energy efficiency or renewable energy generation activities to their customers. Retailers pass on the costs associated with acquiring these certificates to their customers.
In most cases, the environmental scheme charges on your energy bill are calculated using a regulated scheme percentage (standard for all retailers) and the customer-agreed price, typically a dollar value per certificate. This price can be found in your contract with your retailer. This results in a charge to your business as a cost per kilowatt hour.
Network charges relate to charges for use of the electricity distribution system passed through to you from your local network distributor. These charges may account for as much as 30% of the energy bill of large energy users. Through network charges, you contribute towards the building, operation and maintenance of the poles and wires that deliver electricity to your sites. The charges you pay depend on the tariff your network provider determines is applicable to your site based on your site’s electricity usage and consumption patterns.
It’s important to find out if you are on the right tariff to ensure you are not paying too much.. Your current tariff may no longer be optimal because of changes to your energy usage patterns as well as annual adjustments to tariffs by your network distributor.
Contact your energy retailer today to find out if you are on the right tariff for your business. tariffs can potentially save you a significant amount in network charges.
Market Operator Charges
AEMO Ancillary Charges
These charges reflect the Australian Energy Market Operator’s (AEMO’s) costs to manage the power systems safely, securely and reliably.
The market operator recovers these costs from retailers, who pass them on to end-users. While these appear on your electricity bill, your retailer is not permitted to profit from the charging of ancillary service costs to customers.
AEMO Market Charges
AEMO market charges reflect the operating costs of the market operator. AEMO operates on a user pays recovery basis. Market charges are annual costs paid by energy retailers. Your retailer will examine the fees, determine which apply to its customers, and apportion them across the customer base at a cost per kilowatt hour and per site.
Market operator charges account for a small proportion of your overall energy bill.
Metering charges are charges for the provision of metering and metering services, that are either arranged by your energy retailer or by you under a direct agreement with a metering provider.
You may have noticed that loss factors are applied to many items on your bill. Loss factors are regulated and relate to the losses that occur as electricity moves from the point of generation along the transmission and distribution networks to the end user.
Loss factors are calculated by AEMO, the market operator, and are adjusted every July.
At ERM Power, we know that accurate billing is important to our customers. That’s why we promise clear and concise billing, on time and in a format that is right for your business. This helps to save you valuable time and money chasing and reviewing bills. This is the service you deserve.
To find out more about your big business energy bills, contact your Account Manager today or call 13 23 76.