Structured Process Yields Best Results

01 Jul 2001Archived News Climate Change Matters

Most of us would have seen a dramatic shift in energy prices over the last few years. Prices have increased and the forward market view in some regions does not compare favourably with pre deregulation prices. No longer does the simple strategy of asking retailers to 'sharpen their pencils' bring the best results. So how can energy costs be minimised?

 

Planning

There is no doubt that strategic planning of market entry coupled with a proper negotiating strategy will bring results. No where was this more evident than the 'whole of SA government' electricity supply contract negotiated by DAIS with support from Energetics. Reported in The Adelaide Advertiser on 13 June 2001 under the headline "Best Power Deal In Town", this contract clearly demonstrates the value of a structured and well thought out approach.

Review of Regulated Charges

Regulated charges typically account for 30%-35% of total energy costs. In fact, for many small accounts, the impact of regulated costs and metering can easily represent 50% or more of the total cost. This will be especially critical for users who have many small sites that will be impacted by full retail contestability (FRC).

Anecdotal evidence indicates that a significant proportion of all sites are on the wrong tariff, be it franchise tariff or network tariff. This has been borne out by work done by Energetics for a number of organisations that have had a multitude of relatively small sites. Energetics have procedures in place that allow us to quickly check all of our client's tariffs and highlight sites that are on the wrong tariff. These sites can then be transferred onto the correct tariff and our clients are able to keep 100% of the savings.

Metering

Energetics has helped a number of organisations review their metering and access requirements. Energetics has also helped the Municipal Association of Victoria (MAV) develop an 'Operation Maintenance and Replacement Code' (OMR) for public lighting and we have reviewed the metering/ metrology requirements for a number of small sites.

Data Management

This is particularly important for those users who have a large number of relatively small or medium sized sites (e.g. water authorities, local council, banks, franchise operations etc.). Our experience has been that many of these organisations cannot easily identify their energy use and costs by operation/site/department and division. This is often complicated by a lack of readily available billing data and consumption data.

Without this information, it is difficult to develop an optimum strategy for electricity contract negotiation and it is difficult to undertake tariff reviews as discussed previously.

To deal with this issue, Energetics have developed a number of software tools that clients can use to conveniently store, access and manipulate this data. These tools can either be provided to our clients for their use or alternatively, Energetics can manage the data as a bureau service

Value Adding Services

There are a number of areas where electricity retailers can offer additional cost saving opportunities through 'Value Adding Services'. Unfortunately, many electricity purchasing processes do not have sufficient flexibility to address this opportunity. Furthermore, many users who negotiate value adding services as part of their retail electricity contract are often disappointed with the way these services are delivered. Energetics have processes in place that help our clients identify the optimum mix of value adding services and ensure that these services are delivered to their expectations.

Join the conversation