Issues for Energy Purchasing in 2002

01 Feb 2002Archived News Climate Change Matters

 

Electricity

Prices are currently falling and are expected to be slightly lower than they were at this time last year, particularly in Victoria thanks to the mild summer. The challenge for customers who are currently negotiating electricity contracts is to ensure that they capture the low point in the market. New generation projects and inter-connects in the Southern Region will impact on electricity prices over the medium term.

 

Overall, pricing for electricity in all NEM states will remain highly volatile and the risk to business continues to be exposure to significant price changes. Beyond this, the opportunity to secure a fair price for short and long-term contracts will depend greatly on your organisation's purchasing strategy and your ability to change in response to signals from the retail market.

Issues to be aware of include tougher greenhouse legislation requirements and the MRET Federal legislation covering renewable energy liabilities for retailers. Initially this has marginally increased the costs for retailers but in future it will provide a driving force for businesses and retailers to work together as these costs are increasingly being passed through to consumers. Already end users are driving the process in search of cost effective greenhouse reduction solutions, competitive Green Power and/or renewable solutions.

Natural Gas

In comparison to electricity, the market for gas is relatively stable, and competition levels in NSW, Victoria and even Western Australia are high. Medium to large gas users who have not reviewed the gas market in the last year or so would be likely to achieve savings by going to tender at their next contract review date. Significant savings can also be achieved by ensuring that the appropriate contract MDQ and ACQ levels are set.

It is important to check the notice provisions in your contract if you are planning to go to tender for your next renegotiation. Written notice of up to six months is often required, and failure to provide this notice can result in an automatic extension of your contract for 12 months.

 

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