How Do Your Energy Costs Compare Against Your Competitors?

01 Aug 2003Archived News Climate Change Matters

Energy deregulation has offered businesses the opportunity to negotiate better prices and service outcomes. It has also exposed businesses to energy risk and substantial price volatility. How these risks are managed will have an impact on your business' competitive advantage.



Over the last three years there have been substantial variations in electricity prices. The timing of your last energy contract negotiation has had a significant impact on your current price. Customers who negotiated during high price periods are now paying rates that are 20% to 30% higher than other businesses in the same industry. This has forced some organisations to increase the prices of their goods and services and may even have disadvantaged them in their competitiveness. Given that the price change at the end of the contract can be significant (also described as a "rate shock") it can have an impact on an organisation's cash flow.

This exposure can be managed through regular tracking of market prices and ensuring that future negotiations are undertaken when market prices are more favourable. In doing so you can help your business remain competitive in the long run and avoid paying higher rates than necessary.

To ensure that you can monitor this energy risk and your current market position, we now provide an Energy Benchmarking Survey for electricity & natural gas. This market survey compares all negotiable costs including environmental charges.

Environmental charges for compliance costs are passed through by retailers to the end-user and cover the Mandatory Renewable Energy Target (MRET) and NSW Greenhouse Abatement Certificates (NGACs). These charges are not regulated. Environmental compliance costs are increasing and we have started to benchmark this area to identify sites with above-average costs.

Recent studies for clients in the manufacturing, property and printing industries have helped measure their relative competitive advantage with energy costs and identify high priority areas for future savings.

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