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Energy Action launches Energy Price Index for Australian businesses

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Australia’s leading independent energy management company, Energy Action has launched the Energy Price Index (Business) designed to give businesses transparency on retail electricity price fluctuations.

To be published regularly throughout the year, the Index is based solely on electricity contracts secured for Australian organisations and will enable Australian businesses to have access to a realistic benchmark to baseline and compare their retail electricity rates.

The Index for businesses encompasses pricing from numerous energy retailers via the Australian Energy Exchange (AEX), Australia’s only reverse auction platform for electricity, which runs approximately 10 to 15 electricity auctions every day.

Australian businesses have traditionally used the Consumer Price Index (CPI), which helps to understand pricing levels across a broad range of goods, to forecast increasing overheads. But the CPI has its limitations for businesses, particularly when attempting to index volatile electricity price fluctuations.

The Energy Action Price Index attempts to fill this gap by showing the raw electricity component of a bill so businesses can better understand pricing.

Since electricity rates differ between residential and business contracts, Australian organisations find it difficult to accurately understand, predict and track electricity cost movements. Most Australian businesses have become accustomed to forward contracting their electricity to secure a level of price certainty, with many relying on advice based on the wholesale electricity market’s price movements, though the retail prices that can actually be achieved do not always align due to constantly changing market conditions.

The Energy Action Price Index highlights electricity price movements and the real impact of market forces when securing forward contracts, providing businesses with genuine insight into retail electricity rates.

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