The Secrets of the Energy Suppliers Revealed!
Do you have a special strategy to deal with your energy supplier?
Frankly, you might need to up your game. How do you approach your energy management?
As business owners, do you truly have the time to invest in dealing with your energy contract?
Especially, since you will be required to read the many pages of your energy contract just to understand what is hidden beneath the fine print and fancy words the energy suppliers throw around!
Managing your energy costs is a combination of properly maintaining your energy consumption and arranging suitable contracts for your business. This is full of hassles and complicated processes, which will cause you headaches and rob you of your time to properly run your business.
The energy prices are so complicated, there are so many factors you need to understand and calculate to know which energy contract is the best for your business.
Many business owners are putting too much focus on the rates, they end up ignoring the terms and conditions that may put their business at risk.
To help you understand more about the hidden parts of your energy contract, we offer our insight on the matter! Let’s see what secrets are hidden beneath those overly boring and confusing pages!
1. The Auto Renewal Clause
Are you happy with your current energy contract? Because if you are not, you might want to watch out for this hidden clause in your contract. Some energy suppliers may automatically renew your contract on the day after your contract end date, the suppliers then can roll over the new charges they have deemed appropriate for you and you will be required to stay with them for another 12 months.
While these suppliers will notify you about the renewal process, sometimes they keep you in the dark as to what to do and what options you have. If you missed the renewal period, you will be stuck with this new contract with its renewed rates and terms and conditions.
If you are caught with this clause, you may exercise the 10 days cooling off period or exercise your right as a small use customer. You may speak to one of our energy specialists on 08 6460 1613 to identify other options which maybe available for you
Avoid paying excessive energy costs for your business! Take a look at the fees and charges involved in your energy pricings
2. Shortfall Penalty
How is your business faring these days? Has business picked up yet or are things remaining the same?
As a business owner, you are dealing with so much uncertainty around business productivity and performance. As a result,you need to be aware of the shortfall penalty.
When you read the contract, please look for phrases like Minimum Take or Minimum Annual Consumption or a phrase along these lines. Be mindful that many energy retailers impose a minimum amount of energy to be consumed annually.
This amount commonly ranges from the smallest 10% to a whopping 80% of total energy consumption.
You can find this information on your contract renewal around the terms and conditions section, by not meeting the annual contract quantity, your energy suppliers might impose shortfall charges to you.
3. Unbundled Trick
No matter which energy suppliers you are with, have you ever wondered why the new contract looks so cheap and what differentiates these contracts?
Take a look at the contract option in your current energy contract, does it state that your rates already cover all the other costs and fees involved? or do you have an unbundled contract?.
Unbundled contracts might seem cheap at first glance, the rates can be very low and seem great. However as with most things that seem too good to be true these rates DO NOT cover the other costs and expenses associated with supplying your business.
The costs included; network charges, capacity charges, market charges, REC charge, and the loss factors. These charges are all referred to as Pass Through charges, the unbundled contract is an arrangement where all the charges are quoted separately!.
Managing an unbundled contract is not a simple task, it requires in-depth understanding of the energy business and it is not something that you as a business owner want to get involved with.
Is it worth spending all your time dealing with energy management instead of running your business? Take a look at your bill, if you see these charges we mentioned above then you better have a conversation with your energy supplier.
Are you happy with the rates? Our energy specialists may negotiate a more favourable price and outcomes for your business. Simply book a free energy cost audit here.
Secure the best energy contract options for your business, start by the comparison and how to choose the best contract options for your business.
4. Passed through Charges
Guess what happens when there is an increase in energy prices? Does the supplier absorb the additional costs?
No, the normal practice is that the energy supplier will pass on the costs to you instead. Can they do that? Your contract definitely allows the supplier to do that!
Find a section in your energy contract called Change in Regulatory Charge or Change in Law, it states that in the time energy prices are adjusted then the energy supplier may pass through the incurred costs to the customers instead.
One of the most common increases in energy pricing is the adjustment of network charge, this is a cost that is incurred by energy suppliers utilising the energy transmission network to supply their customers.
This normally occurs every financial year. This charge is passed through from the Network provider Western Power to the supplier and then onto you.
5. Shorter Payment Terms
Let’s take a look at the payment terms for your energy contract and how it varies from one supplier to the others.
Although the common business practice is a 14 days period, many energy suppliers actually offer less flexibility on their billing payment. Some suppliers only offer a 10 day period or 12 day period.
What will happen if you don’t pay your bills in time? There will be extra charges incurred as penalty for the late payment. The charges vary from a fixed amount (i.e. $50) or in percentage with a tally starting at 5% (or more) of the total invoice.
Further delayed payments allow the energy suppliers to pursue several actions which will result in discontinuation of supply which may be followed by legal actions taken by the suppliers through a debt collection agency. Make a mental note on the due date and make sure you are operating within the limitations to avoid further risks and headaches.
Learn more on common problems in negotiating energy tender yourself.
6. 2nd Year Stepped Pricings
Most of the time, customers will only focus on the pricing they are offered FOR THE FIRST YEAR ONLY. Many business owners fail to pay attention to the second (or third) year, this might result in a rude awakening when you see the price difference year to year.
Take a look at the offer you received from your energy supplier, does it state the rates past the 1st year?.
The increase can be incremental and it might happen a couple of times per year. Your energy contract may state an increase from 1 cent or more, this may well cause a financial catastrophe for you and your business.
Those are the six hidden factors that the suppliers might not want you to know! However, we also include a very important and rare situation that you need to be aware of;
7. CPI Adjustment
We believe you are familiar with this factor, but do you know that some suppliers may impose quarterly CPI adjustment which means every 1 January, 1 April, 1 July and 1 October in each calendar year.
Instead of the annual CPI. This means your CPI adjustment rates will be slightly higher than the Annual adjustment.
Are you confused? It must be stressful because there are so many factors to take into consideration when dealing with your business energy requirements? It is not something that you can take lightly or else you find yourself in a very complicated situation.
Take a look at our testimonials from our customers.
How an Energy Broker can Simplify Energy Procurement
Carbon Energy is a Perth based Energy Broker. We are here to assist you with your energy tenders. Our energy specialists are knowledgeable and well experienced in the industry.
Our energy tender is fast, efficient, 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 business:
- 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 condition of the contract (If to be in place).
- Summaries, the suppliers, offer in simple and easy to understand language, enabling you to make an informed decision.
We guarantee you it is 100% RISK FREE, if anytime throughout the process you are not confident that we demonstrate professionalism, honesty and transparency. You are free to walk away with no questions asked. That’s our promise to you, no hurt feelings.
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.