ELECTRICITY CONTRACT OPTIONS FROM PERTH ENERGY PROVIDERS:BUNDLED & UNBUNDLED ELECTRICITY CONTRACTS FOR YOUR WA BUSINESS
For Businesses in Western Australia, having the appropriate electricity contract may save them from a significant amount of extra costs on their energy bills. This is especially true for businesses with big machinery or continuous needs of either electricity and or gas. Having a suitable energy contract sometimes requires a lot of effort as well as extra time to properly understand the terms and conditions as well as other elements of the contract.
This article will shed some light on the topic of understanding business electricity contract options, especially the ones commonly implemented in Perth Western Australia: the Bundled and the Unbundled. These two types of energy contract if properly managed will help your business to save money.
Read more about what advantages and disadvantages engaging with energy brokers have for your business procurement needs.
What is the Electricity Contract?
An Energy contract is a legal agreement between the customer and the energy provider, it defines the amount and the price of energy that the customer is entitled to. In essence, it is similar to a business agreement, and it binds the parties involved for a certain period of time. The energy contract protects both the customer and the energy supplier to ensure the rights and responsibilities of each party, respectively. It encompasses the fixed rate of the energy consumption bills as well as the agreed variables that consist within.
You can learn more about what actually makes up your electricity bill and understand more about how the electricity suppliers quotes your electricity cost.
Benefits of Signing Electricity Contract
In Perth, WA, it is a common practice for businesses to sign an energy contract to have a better energy contract rate. Not only does it protect your business from the unexpected rise of energy rate, but it also ensures the continuity of your energy supply. By having an energy contract, it will secure your business from the sudden unforeseen changes or potential liability in your energy consumption. This is especially important since the energy market in Western Australia is one of the most competitive in the country. With up to 8 electricity providers fighting for the same piece of the pie, it can get confusing to decide on the best electricity provider.
Another benefit of having an energy contract is that your business is sure to have a tailored contract that matches your business consumption needs. It will adjust the consumption rate as well as the terms and conditions of the contract to suit what your business needs and wants. No more generic and mass targeted tariff rate or confusing and unspecified policy awaits.
Read more about BIG PROBLEMS associated with Business Electricity Contracts.
Business Electricity Contract in Perth WA: Bundled vs Unbundled Options
The electricity providers in Perth WA commonly offer two types of energy contract, they are referred to as Bundled and Unbundled. Each offers different types of pricing rules and have distinct advantages and disadvantages,
1. Bundled Energy Contract.
The bundled electricity contract is a very straight forward option. This type of contract is simple to calculate and easy to understand. Generally, when you receive a bundled offer, the electricity suppliers charge you by bundling the charges. Other components that make up your energy costs such as the network cost, capacity cost and renewable charges are also lumped into the offer. Therefore, the risk is sitting at the electricity providers level, and the provider will manage any unexpected increase in cost due to the way of the energy being consumed.
Naturally then the biggest challenge with this kind of arrangement comes down to the primary contractual conditions of each energy supplier.
Pros & Cons of Bundled Electricity Contract
We understand that you want the best possible deal for your business. Still, please keep in mind that Energy Suppliers or providers will market all kinds of exciting offers to lure business. This is not limited to offering their services without properly disclosing all the hidden fees and charges. If you want to be a smart consumer, these fees and charges need to be calculated and examined closely based on the value and relative risks. We see many energy providers release this bundled offer all the time. At first glance, yes, the energy offer seems quite attractive.
Still, upon closer inspection, you’ll realise that this is only covering up the high minimum take component, supply rate and other various charges that have not been mentioned. So you often get confused and just assume they are getting a quality energy offer without thoroughly analysing the package in complete detail and reading the fine print. On top of those rates, there are various other factors you will have to consider before taking the bundled offer. One of such factors is the minimum take component, the annual Consumer Price Index (CPI) adjustment, an overrun charge, network pass-through cost and any changes in the law.
2. Unbundled Electricity Contract
The unbundled contract is more prevalent in the Eastern states. Unbundled electricity contracts are transparent, but have higher risks, perhaps cheaper if managed well. The majority of electricity suppliers in Melbourne, Brisbane or Sydney apply this sort of methodology into the electricity contract. All the components that make up your electricity cost, such as the energy cost, capacity cost, network cost, renewable price are fully disclosed and charged accordingly. Any variation in cost due to the market changes or the way you use the energy will be passed through to you, generally at a price.
Pros & Cons of Unbundled Contract
One must not try to run before knowing how to walk, agree? In that case, please ask yourself if you have what it takes to handle the unbundled contract? Especially with all the cost broken down and each with different types of calculation as well. It’s worth remembering that the energy suppliers generate revenue from the energy you use and you as the customer have to manage your risks. Although the energy rates for consumption appear to be very low, you will need to be aware that other components will make up your final cost. Generally speaking, an unbundled electricity contract sounds very enticing, in principle. However, in reality, as a business consumer, you may end up paying unnecessarily higher rates, due to a lack of knowledge on how the costs are structured. Unbundled energy contracts are transparent, although they have higher risks but they can be cheaper if managed well.
If you are unsure which one of these two that suits your business more, what are you waiting for? Try our free energy cost audit here valued at $2000.
Which one is the best Energy contract then?
As we have mentioned, by having an energy contract, your business will have a tailored made arrangement that suits your energy consumption profile. Thus there is no such thing as the Best Electricity Contract. This all depends on your annual consumption and the way you consume energy.
If your business is located in Perth, and you spend less than $1 million per annum on energy (both Electricity and Gas) and you do not have the manpower to manipulate the way you use the energy. Then the electricity bundled offer is generally cheaper. It has a lower risk potential for your business.
However, if you spend more than $1 million per annum, plus you have dedicated energy expert personnel on board. Then an unbundled energy offer will give you more of an opportunity to cut your cost, provided you have a clear understanding of how to manipulate your load. To take full advantage of an unbundled offer, you need a well-planned energy management system in place, as well as the resources to do so and not every business has this.
Carbon Energy as your prefered Energy Broker
Carbon Energy prided ourselves with our immense knowledge and years of experience in the energy market. Engaging us to manage your energy requirements will be the best decision to start reducing your power bills. We will save your time, and do all the painful work for you. We access you the best solutions in the easiest, secure and convenient way possible. See more of our clients and what they said about us here.
Are you in the process of negotiating an energy contract with various suppliers in Perth, WA?
We encourage you to speak to one of our friendly, non-pushy consultants to understand your options further. We can assist you in navigating and finding the best deal that provides not only value for money but low risk to your business.
Haven’t used an energy consultant yet? So why wait any longer?
We will personally assess the requirements of your business in terms of cost, consumption, future growth and find you the most competitive electricity supplier to supply your business here in Perth, Western Australia. Whether you are looking to save on electricity or gas or commercial solar, we can assist you in finding the best deal for your business needs. Speak to one of our energy specialists to get a free energy cost audit (valued at $2000) on 08 6460 1613.