Ask the Right Questions to Get the Best Energy Deal
Considering switching business energy providers? A word to the wise: lock in the best possible terms by thinking green and assuming nothing.
Having dealt with soaring energy costs for years, organisations are becoming savvy. They know they can save significantly if they negotiate wholesale energy prices with retailers. What many don’t realise is that’s not the only way you can control what you pay for energy.
More Powerful than you Think
“While network tariffs are fixed costs that stay the same no matter who you’re with, this is not true of environmental scheme charges,” explains Steve Rogers, ERM’s Executive General Manager.
“People assume environmental scheme charges are also fixed – possibly because they’re connected to Government energy efficiency policies – but that’s not true at all. The certificates created by these schemes are market-based, tradeable commodities, which can vary substantially in price.
“Given that environmental schemes account for around 10 per cent of the end bill for commercial and industrial customers, ensuring you get the best price is a smart move that translates into real savings,” he said.
Spark Savings & Avoid Bill Shock
The upshot is that organisations should have their eyes wide open when comparing offers in a tender process – and not just in regards to the ‘black’ wholesale and retail charges. Ask questions about how the ‘green’ rates are calculated.
“Check whether the green rates specified are indicative or guaranteed. That way, you know you’re comparing apples with apples,” says Steve.
“With ERM, what you see is what you get. Our pricing is transparent. We guarantee our fixed rate and certificate pricing for environmental scheme charges up front, so organisations know that what they’ve signed up to is what they’ll be charged for the duration of the agreement – subject only to legislative changes to the scheme,” he explains.
This isn’t true of every retailer. Some purposely provide attractive indicative rates during the tender scheme process that are subject to change.
“On the surface this may make the offer look more attractive, but it can create a false economy because retailers aren’t contractually locked into the price they’ve tendered. The actual price organisations are charged on their bills can be markedly different.
“If organisations want cost certainty, guaranteed fixed prices for environmental scheme charges are the only way to go,” says Steve.
What Environmental Schemes Apply?
Several State and Federal Government environmental schemes are in place to encourage renewable generation, minimise greenhouse gas emissions and boost energy efficiency. Charges are typically levied in connection with these schemes, which appear on electricity bills as individual line items under ‘environmental charges’.
The ones that most often apply to our commercial and industrial customers are:
- The Federal Government’s Renewable Energy Target (RET) scheme launched in 2001 to reduce greenhouse gas emissions and encourage renewable energy generation
- It’s split into two parts – the Large-scale Renewable Energy Target (LRET) and the Small-scale Renewable Energy Scheme (SRES). Both incentivise investment in renewable energy sources through the creation and sale of market-based certificates. Learn more here
- Since the RET launched, a number of State Governments have also introduced energy saving schemes to reduce carbon emissions
- The Victorian Energy Efficiency Target (VEET) scheme is a Victorian Government initiative aimed at promoting energy efficiency
- Established under the Victorian Energy Efficiency Target Act 2007, VEET initially focused on residential accounts and moved to cover business customers from 2012.
- Learn more at veet.vic.gov.au
The Energy Savings Scheme (ESS) launched in 2009 in New South Wales to reduce electricity consumption by creating financial incentives for businesses to invest in energy saving activities. Learn more at ess.nsw.gov.au