Save money on your energy bills, despite recent price increases

22 Jul 2010Archived News Climate Change Matters

This article considers the latest trends in energy prices and the opportunities to significantly reduce your energy costs through analysis, planning and renegotiation of your electricity supply contracts.

Components of an electricity invoice

While it will vary by industry, location and load profile, energy and network charges are the major cost components in any electricity invoice. The energy component is negotiable and prices can be fixed under a contract with an electricity retailer. Network costs are regulated by the Australian Energy Regulator, having been managed previously by state-based regulators.

Network tariffs are revised annually on 1 July in all states except Victoria, where revisions occur on 1 January. The table below shows the approximate network increases by state from 1 July 2010 and their total cost impact based on the indicative split shown above.

The increases shown are averages across a range of tariffs. In some cases specific sites could see a different increase. Although network prices are regulated, in many areas there is a choice of tariffs that can be applied. With analysis, Energetics can advise the optimal tariff arrangement for your business, particularly where there has been a change in usage or demand profile. One of Energetics’ clients was able to achieve $103,000 of savings per year following a tariff optimisation carried out in June for four accounts.

Network costs increasing, energy costs falling

The good news is that while network costs are increasing, energy costs are continuing to drop. This is despite fundamental long term trends indicating that prices will rise. The graph below shows recent price trends in NSW electricity for 2011/12, and other states showing similar falls in prices.

Two of the key reasons for the recent fall are a postponement of the emissions trading scheme and a reversal in demand growth. The latter effect can be seen in the graph below showing NSW annual electricity demand, where the recent trend of a year-on-year increase of 2% has reversed temporarily. The projection is from the Australian Energy Market Operator.

What is not yet understood is the point at which demand and prices will rise once more. However, with prices now at their lowest point since January 2007, businesses should consider re-contracting. A client who recently re-contracted their electricity in 2012 and 2013 has reduced their future energy costs by $971,000 a year.

How can Energetics help?

The energy market presents both opportunities and risks to your business. Energetics regularly provides market briefings for our clients and can identify opportunities for immediate cost savings. Energetics is available to deliver a short briefing for your business to help you develop a strategy to minimise your energy costs.

If you would like more information, please contact your Energetics' Account Manager,

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