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Why My Business’s Electricity Rates so High?

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HOW TO COMPARE ELECTRICITY PRICES FROM ELECTRICITY PROVIDERS IN PERTH

Have you ever wondered whether you are paying too much for your electricity? Have you tried to compare electricity rates offered by various electricity retailers in Perth?

With the ever-increasing electricity rates, the amount being charged for electricity accounts in Perth WA, have become a major cost for business owners (especially with this pandemic). In order to ensure your electricity supplier does not charge you with an unreasonable energy rate, We present to you an article to help you secure better electricity prices. To secure a more cost-effective electricity rate it is important for you to:

  1. Understand how to read your electricity bill;
  2. What makes up your electricity costs;
  3. Understand your contract terms & conditions;
  4. How electricity providers quote your businesses.

However, the real question is HOW TO LOWER YOUR ELECTRICITY RATES? And is it even possible?


1. How to Understand Your Business Electricity Bills?

How important is it for you to understand your electricity bill?

Think about it, if you know what you are dealing with, then maintaining a lower cost will be easy.

When asked about how easy it is to figure those nasty bills out? “As long as you understand a little bit about math, you should be fine”, said one of our Perth based clients, who was puzzled on how complicated it can be; however, after we showed the variables that make up their energy cost and how they use energy affecting their price they were astounded.

Business Consumers tend to believe that negotiating an energy contract is just like negotiating to buy anything else. It is about the volume. The more you use, the less you pay.

BUT IS THAT TRUE?

What Makes up Your Electricity Bill

In reality, it is not as simple as that! When you pay your electricity bill to any of your preferred electricity providers, made up of two main components as follows:

1. Consumption charges

This applies to how much power you used on the property during the supply period. The term to measure your consumption is kilowatt-hours (kWh). The energy suppliers charge you at different rates based on the time of the day.

  • Peak (8 AM to 10 PM, Monday to Friday) and
  • Off-peak (10 PM to 8 AM from Monday to Friday and all weekend).

Means aside from the volume of your consumption, the rates also depend on the amount of electricity used in a certain period. Or you may have been offered a flat rate anytime consumption rate.

2. Fixed charges

This cost occurred since you need to pay to receive a supply of electricity to your building. Aside from your electricity consumption rate, the contract will also impose additional fees or expenses as part of the electricity network’s maintenance. Examples of this are the supply charge, admin fee and metering charge.

electricity bills

Knowing all this information about electricity costs will help you compare electricity rates. Now it is time to pay attention to your electricity bill. All of these factors above determine the final cost. Understanding them will help you make a better and more informed decision to compare electricity rates from Perths’ various electricity retailers.

Considering that the electricity prices have kept increasing, is it possible to lower your electricity cost?

Learn the tips on how to negotiate your business electricity contract and get a better advantage on your energy contract deal.


2. What Makes Up Your Electricity Costs

To help you gain more advantage in reducing your business electricity rate, we explain the costs the retailer charged you. You need to know what these costs are and adjust your electricity rates to suit your needs. Please check your electricity bill and see if you can recognise how your electricity retailer quoted you. Here is your electricity bill breakdown:

1. Wholesale Costs

Around 53% of the wholesale costs make up your bill. This is the cost of sourcing and generating electricity that you consume. It consists of the raw energy cost for the grid-generated electricity, the energy storage and maintenance cost.

power bill breakdown

2. Network Costs

Around 38% of the network cost makes up your bill. This is the cost of having the electricity transported through Western Powers infrastructure (wires) to your business or home. It consists of the distribution costs, transmission costs and system balancing costs.

3. Regulatory Charges

Around 8% of the regulatory charges make up your bill. These are charges controlled by the state and federal government and include climate change policy charges and Government obligations. Examples of these charges are the renewables incentives, green energy schemes, suppliers obligations, and Feed-in-tariff or solar buy-back schemes. The costs also include subsidies for residential customers and small or home businesses.

4. Retail Costs

Around 2% of the retail charges make up your bill. These are the charges linked to your supplier taking care of your account, handling all the data responsibilities, provisions of the meter and taking up meter readings, as well as maintaining a stable supply of energy to your premise. Of course, any supplier that also owns generation assets can make an additional margin from this element.

Those four costs contribute to your energy bill, and you may notice that the one you have control of is the retail cost. Suppose you wish to reduce your electricity bill. In that case, you need to know how much electricity costs you owe to the energy provider and what made that up.

3. Understand Your Electricity Contract Terms & Conditions

Why do you need to compare electricity rates and its terms and conditions? Isn’t it all the same?

NO, THEY ARE NOT!

With such a dynamic and competitive energy market, understanding business electricity contracts will genuinely benefit the business owners.

Whether you are a small, medium-sized or even a large business, we believe that all companies will benefit from having a competitive electricity contract. You can learn more about the Government Regulated Tariff from Synergy here.

Another Hidden Part From Your Commercial Electricity Contract

There are a few more things to consider when reviewing an electricity contract, such as:

a. Some energy providers have Minimum and Maximum Take; this is when your consumption goes lower or higher than what the supplier has estimated over one year.

This term refers to a binding clause that requires customers to fulfil a certain quota of energy consumption lest they are subjected to a penalty to make up the gap.

The shortfall and Overrun are the terms used to describe the gap between the contracted amount of Minimum and Maximum Take compared to the customers’ actual consumption.

The shortfall penalises the customer if they fail to meet the minimum quota of the agreed amount of energy consumption. In contrast, Overrun penalises the maximum amount of energy the customer will be allowed to consume past the said quote.

b. Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.

It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Refers to the calculation of your energy consumption adds up with CPI included. To learn more about CPI, click here.

c. Passed Through Charge, this term refers to the situation in which there are changes for energy providers’ rates due to the Government’s energy policy. In most cases, the energy providers ‘passed-it-through’ to the customers.

d. Meter Upgrade Fee, this is not often. Still, if your meter requires an upgrade or replacement due to age and malfunctioning, the fee for this may or may not be included in your business electricity contract.

In that case, it will cost you extra to have your meter updated to the standard required by the network operator.

e. Change in Government Regulation; the Federal and State Government heavily regulates the energy industry. They may introduce a new regulation that may affect your energy cost.

When this happens, the retailer will pass through the cost to your contract. For instance, the introduction of carbon cost that is now no longer applicable influenced customers’ cost by 10% at the time.

Those things mentioned above are the most important things when you compare electricity rates for your contract. Make sure you know what those costs are, and ask your preferred energy broker or energy retailer to provide you with detailed information about the charges, risks and other points of interest before deciding to go forward with your contract. Be meticulous!


4. How Electricity Providers Quote Your Business?

How Electricity Providers Quote Your Business

Next, we provide you with how the electricity providers in Perth quote/charge you for your energy consumption. To help you understand, we have simplified some of the information. Although we advise you to have an energy broker to compare electricity contracts, this will offer you and your business less hassle with the maximum outcome. The electricity providers will base their quote on the following items:

1. Volume, the amount of your consumption, will significantly influence your business energy contact rate. In another way, the more energy you use, the more bargaining power you have.

2. Time, the timing, i.e., when you use the energy. It is a fact the price of energy is not low over the summer, and some industries use more energy during the summer period, mainly due to the high temperature.

The suppliers must run their equipment to ensure their operation runs smoothly and not overload the South West Interconnected System (SWIS) Network.

Although you might not care where your energy comes from, the WA government needs to ensure enough energy is in the grid when your load spikes. This additional energy is only required, maybe 12 times a year. These unexpected spikes of power usage mean that investment in power generation is needed to improve network reliability.

This action is necessary to ensure that the Network providers (in WA, Western Power) transmit the energy they generated with minimal interruption to your business.

If you cannot control how you use energy during the peak summer period. In that case, you will have some serious issues with your energy contract. As you will be hit with a very high capacity cost, meaning higher peak and off-peak rates on your business electricity contract.

Ask your energy provider to provide you with several options to compare electricity rates in different situations. THERE IS ALWAYS A BETTER DEAL!

3. Thirdly, your business energy load profile. We understand you must be asking Business Energy What? Since the terms load profile is confusing, you’re probably wondering.

“I have used so much power. My energy consumption usually doesn’t vary greatly, so I do not understand why another business across the road managed to get better electricity rates than I am getting? My energy volume is higher and ever-increasing”.

Why? The answer is straightforward, the way your business consumes energy will determine the rates offered to you. If you are in a weather-dependent industry where you have to use energy to protect your business, such as a retail shop, agriculture or medical and an aged care facility, you need to look at putting some energy management plan in place.

Understand and implement the energy management plan. Volume is substantial, but it is not the main part that determines your electricity contract price. This will translate to a cheap electricity contract to supply your business. We are here to help you to understand how the energy game works in Perth, Western Australia.

If you think you pay too much for your electricity cost or if you want to save more money from your power bill, please give us a call for a free-obligation energy audit.

Have you ever faced any problems with your business’s electricity account? Learn and prepare more about BIG PROBLEMS associated with business electricity contracts.

Employe Specialists to Secure Better Rates & Outcomes

Carbon Energy as your preferred Energy Broker

Carbon Energy is here to assist you in your attempt to save your business from excessive energy bills. Our energy specialists possess immense knowledge and vast experience in the energy market. Engaging us to manage your energy requirements will be the best decision to start reducing your power bills.

If your business electricity or gas contract is due to end within the next six months and your annual ELECTRICITY IS OVER $14,000 p.a. or GAS IS OVER $7.000 p.a., now is a perfect time to get started on representing you to get you great alternatives and discounted rates.

Our approach is straightforward, risk-free and NO COST to your company. The successful retailer remunerates us should you accept our recommendation.

We will perform the following steps to assist your company:

  1. Analyses your current energy cost and consumption.
  2. Invite the retailers to price your business and analyse each offer.
  3. Run a bill simulation based on your last 12 months data and identify the potential risks involved.
  4. Analyses the terms and condition of the contract (If to be in place).
  5. Summaries, the suppliers, offer simple and easy to understand language in plain, enabling you to make an informed decision.

We will save your time and do all the hard work for you. Whether you are looking to save on electricity or gas, or commercial solar, we can help you find the best deal for your business needs. Please speak to one of our energy specialists to get a free energy cost audit (valued at $2000) on 08 6460 1613.

OUR OBLIGATION FREE

RISK FREE PROMISE TO YOU

We grow our business through word of mouth. We have thousands of happy customers who repeatedly use our service to look after their business energy tenders.

We put our customers at the centre of everything we do. We always strive to get the best results for our customers. They are the reason why we are one of the most prominent energy brokers in Western Australia.

If at anytime during the process we do not demonstrate professionalism, transparency and honesty you are more than welcome to walk away.

This is our promise to you.

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I hope you enjoy reading this blog post.
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