A recent survey by energy management company, Energy Action
revealed that more than 87% of businesses considered price as the most important factor when selecting their energy retailer.
However, the cost of energy itself is only one portion of the overall price that an organisation pays for its energy supply. Typically energy charges only make up 40-50% of a bill, with the remainder made up of network, environmental and other service related charges. The tariffs for network charges vary according to the amount of electricity consumed and time of use.
Network tariff charges are reviewed annually to reflect the fluctuating costs of transporting and distributing electricity, and maintaining the infrastructure required to run the network.
Organisations can actually save significantly by switching tariffs since network charges make up a sizable part of their energy bills. Many businesses do not review their tariff when uplifts are applied to ensure they have chosen the best option, which may result in their foregoing additional cost reductions.
Additionally, as network charges are applied based on consumption, implementing energy efficiency initiatives to reduce usage effectively catapults savings across the bill by reducing the overall impact of these charges.
In July, NSW, QLD, TAS, SA and ACT will have their annual network tariff reviews, providing Australian businesses an opportunity to review their current network tariff and ensure they have the best cost savings possible.
Energy Action’s Activ8 customers are reviewed annually to ensure they are on the correct tariff. For instance, in the January review of Victorian network tariffs, Energy Action found significant savings could be made for many clients who were eligible to change to a more favourable network tariff. Energy Action highlighted potential savings for their Activ8 customers of more than $1.2 million, achieving average savings of $5,800, with several being well in excess of $20,000 per annum.
Valerie Duncan, Managing Director, Energy Action emphasises the need for Australian businesses to review their energy contracts as the network tariff changes on 1st July coincide with the introduction of the new carbon tax, which could increase energy bills sharply, even as much as 20% for some businesses.
She also advises businesses to consider securing future energy rates by negotiating a forward contract well before the current agreement expires.
Energy Action’s Activ8 is Australia’s leading energy monitoring and contract management service that not only provides businesses network tariff reviews but also helps monitor spend and usage, achieve cost savings, and identify opportunities for energy efficiency in their operations.