Procurement Process for Your Business Energy Needs
Have you tried to do an energy tender for your gas and electricity renewal contracts? If you haven’t, you are missing out! Many Western Australian business owners might not be familiar with the term energy tender yet, especially if you are on a tariff. However, for businesses who are in annual or bi-annual contracts this would be the best way to test the market.
But even then, most businesses are strictly sticking to the conventional way of doing their energy procurement. This entails you waiting for the renewal offer or the back-forth direct requests for quotes from the suppliers.
While it is true that Synergy is the sole supplier for residential customers, for commercial customers, there are more energy suppliers to choose from.
For these commercial customers, the options available are:
- Auto-renewal, or
- Negotiating directly with the supplier, and
- Going in an energy tender
Unlike the direct offer or the auto-renewal, energy tendering taps into the benefits from the Western Australian energy market’s regulations.
Allowing your business to choose and compare the various offers from WA energy suppliers. Your business will be able to obtain a more financially competitive energy rate with cost-effective and flexible terms and conditions.
However, an energy tender is a complex and time-consuming process, especially with the number of participating energy suppliers and the detailed analysis for each proposal.
But why should you do an energy tender for your energy procurement if it is such a hassle?
Take a deeper look at the advantages and benefits the energy tender brings to your business. Find out the tips and tricks to run an efficient tender successfully!
Procurement Process: Auto Renewal & Direct Offer
If we look at the other form of energy procurement available for commercial customers, there are two ways; auto-renewal and the direct offer.
a. Direct Offer
Direct offer refers to the direct quote from your current supplier; you will probably receive a renewal offer roughly 3 to 6 months before your contract end date.
We would recommend you to look closely at the offer you received and, if you could, to compare the offer you received against your current contract.
Should you accept the offer from your supplier? The answer lies in the comparison we asked you to do. Many of our clients were not impressed with their offer and decided to shop around instead.
b. Auto Renewal
The auto-renewal is quite similar to the direct offer; however, it greatly depends on the auto-renewal clause in your current energy contract. Meaning that almost immediately after your energy contract reaches the end of the contract period, rather than out of contract, your current contract will be rolled in for another 12 months, and usually at higher rates than you are currently on.
Shortly before the contract ends, you may receive a notification of the offer provided by your current energy supplier. In some sense, you have some room for negotiation if you’d like to accept their bids.
However, if you are unhappy with the contract, we advise you to try and shop around for a better alternative.
To understand more about comparing the energy contract offer you received, read about what makes up your business electricity cost.
Energy Tender Preparation You Need to Know
There are many instances that the offers you received are not satisfactory. Hence you might try to shop around by contacting the various energy suppliers you know and requesting a quote. This process is often referred to as energy tender.
Some business owners might be thinking,
How hard will it be? Is it just contacting the suppliers and asking for a quote, right?
Unfortunately, energy procurement is a delicate process requiring experience and knowledge. It is imperative for you to analyse your business energy consumption and load profile before you start the process.
It can be challenging, especially if you do not have sufficient knowledge about the energy industry.
Energy tenders require you to develop precise and detailed information on your current energy consumption; this data will then be used to request a quote from the suppliers.
The data will also help analyse how effective the quotes are and forecast how much your energy cost will be against the offer from the supplier.
How Energy Tendering Sets Competitive Pricings for Your Business
The most obvious benefit of an energy tender is the impact on your business energy prices, allowing energy suppliers to compete for the opportunity to supply your business.
Making their effort to dominate the market another step closer means your energy pricing is not the regular price. Instead, the supplier will have to lower their pricing offers.
The energy tender, if done correctly, will boost the value of your energy contract, especially if you know how to analyse each offer and compare each energy suppliers’ contract options. This will give your business immense advantages over the conventional energy prices you usually receive from the suppliers.
To understand more about how to compare and negotiate the terms and conditions of your energy contract, read about the tips on how to negotiate your energy contract better.
When to Start an Energy Tender?
We mentioned that the direct offer from the supplier is generally sent within a 3 to 6 month timeframe from the contract end date. This period is also often referred to as the renewal period.
Based on our experience, this is the ideal amount of time for you to prepare; a successful renewal process which will require much preparation.
The keys to a successful tender includes an energy cost audit and the contract renewal negotiation; if done correctly, it will significantly increase the efficiency and effectiveness of your tender process.
Before you start asking for quotes and prices from the suppliers, you need to analyse your business load profile. This refers to a variation of the amount of energy your business consumes regularly; this consumption pattern varies based on the type and the size of your business.
Be advised that the energy suppliers price customers based on their load profiles. There is no such thing as one fixed price for everyone, not in the energy business.
The analysis process requires years of experience and hours of meticulous and detailed analysis. Hence we highly recommend you to leave it to the energy specialists who have more knowledge and experience.
The Tender Result
From time to time, there are possibilities that the result of the tender process is not what you had expected. For example, the pricing you are offered is higher than the current rates. Or that the result is higher than what you had wished for.
You need to consider many factors, especially since there are many factors involved in the contract renewal process.
One of the biggest reasons for such output is the increase in cost to supply and the network charges. The increase from the government and changes in regulation costs are some examples of factors that influenced the tender’s result that is outside the suppliers’ control.
Aside from that, there is a possibility that your volume or energy profile has changed, and it may impact you favourably or not favourably.
The number of participating energy suppliers may play an essential role in the output of the tender. The more the merrier, which means the more options you have, the better outcomes for your business.
As a business, it is best to leave it to the professionals such as energy brokers. So, you can focus more on what’s important, which is running your business.
What is the benefit of Using Energy Brokers?
Now, you might be asking yourself,
If it is that complex and complicated, why would I go into tender?
It might be true, doing an energy tender for your business will obtain a more efficient arrangement for your business energy consumption. But it does not guarantee that the result will be better and it does not guarantee that it will be worse.
Energy tenders have become an option for getting better outcomes, allowing you to have broader options and selections of suppliers for your business.
Energy tenders also provide you with the higher ground in negotiating your energy contract options and taking full advantage of tailored terms and conditions on your contract. The most significant advantage of energy tender is putting the suppliers into competition.
The aim of an energy tender is not strictly about the costs instead, it focuses more on the flexibility of the terms and conditions. You will be able to pick and choose the best contract arrangements to suit your business.
Who we are & what we can do?
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 reduce 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 $14,500 p.a. or GAS IS OVER $7,500 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:
- Analyse your current energy cost and consumption.
- Invite the retailers to price your business and analyse each offer.
- Run a bill simulation based on your last 12 months data and identify the potential risks involved.
- Analyses the terms and conditions of the contract (If to be in place).
- Summaries, the suppliers, offer simple and easy-to-understand language enabling you to make an informed decision.
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. We will save your time and do all the hard work for you.