After selecting an energy retailer, many businesses “set and forget”. A year can go past – or 2 years, or 5 years, or even more – and you’re still with the same energy provider you started out with at the beginning.
But with your energy needs changing over time and the energy market evolving as well, paying attention to your energy consumption is crucial.
It could be the case that you’re overpaying for your energy – especially if you’re on the wrong type of tariff for your business.
While recent research shows that 43% of households don’t know what energy tariff they’re on, it’s also the case that a number of Australian businesses don’t know what tariff they’re on, either. This can have a big impact on a business’ bottom line.
Here’s the difference between the tariffs and how to decide which one is most suitable:
Single rate tariff
Energy retailers may list this as anytime use, flat rate or peak rate, but the bottom line is: you pay the same rate for your energy usage, no matter what time of day it is. The rate is usually somewhere in between the peak and off-peak rate charged under a “time of use” tariff” – so it’s higher than the ‘off-peak’ rate, but lower than the peak rate.
Single rate tariffs may be suitable if:
You want the freedom to use energy as and when you need it, which is often during “peak” periods.
You don’t want to worry about scheduling high-energy tasks for off-peak periods.
You want a “set and forget” plan where you don’t engage much with your energy usage.
Time of use tariff
With this tariff, the amount you pay depends on the time of day that you consume energy. A time of use tariff can charge up to three separate rates: peak (the most expensive tariff, usually in the evenings), off-peak (the least expensive tariff, usually overnight) and shoulder (for the times in between, such as mornings and afternoons).
Time of use tariffs may be suitable if:
You want to actively manage and reduce your energy consumption by scheduling tasks to take advantage of lower-rate periods.
You can schedule some high-energy activities to happen overnight, when rates are lowest.
You’d install a smart meter to get updates on your electricity usage, so you can make real-time adjustments.
Controlled load
This refers to electricity that is being used to power a stand-alone item, like an electric hot water service or irrigation pumps. Controlled loads are recorded on a separate meter and can be billed as an off-peak rate. A controlled load tariff is generally offered in addition to a time of use tariff.
Getting the right plan to suit your energy usage and requirements can make a big difference to your overall energy bill. If you’re on a single use plan and have the ability to manage or schedule your high-energy activities, you could stand to save money with a time of use tariff. Or if you’re on a time of use tariff and you’re paying top dollar for peak energy periods, you could potentially reduce your bills on a single use plan.
Let us help you make sense of your energy bill! We can help you work out your current tariff and try to help you find a better deal. Contact us at Make It Cheaper for an obligation-free review on 1300 957 721.
Looking to save on your business energy bill?
We find savings for 4 out of 5 businesses. See how much your business could save.
Running an Australian business is getting more expensive by the day. In April 2022, data released by the Australian Bureau of Statistics (ABS) revealed that 57% of Australian businesses had experienced increased running costs in the previous quarter, and 21% of businesses said their costs had increased to a “great extent.”
Here, we identify the major factors driving the cost of doing business in Australia upwards, and we point to a simple way of easing the pressure.
A Perfect Storm for Inflation
Perhaps the biggest factor driving the increased cost of doing business in Australia is inflation. Just this month, Australia’s inflation rate reached 6.1% – the fastest annual increase in 21 years. We seemingly hear about skyrocketing inflation whenever we turn on the news these days. But what does the term “inflation” actually mean?
Inflation refers to a decrease in the effective purchasing power of money. If you have $1,000 now and the annual inflation rate is 10%, it means that in one year’s time you will get 10% less goods and services (on average) for your $1,000. Effectively, then, inflation eats away at the real value of money. Sometimes it takes small bites, other times (like now) it takes larger bites. Either way, inflation inevitably increases the prices of goods and services, leading business costs to spiral upwards.
What Causes Inflation?
Inflation has two main causes:
An increase in the money supply, which undercuts the value of existing money
A decrease in the supply of goods and services, whose relative scarcity increases their price
In the wake of covid-19, 2022 represents a perfect inflationary storm. Not only are we dealing with the on-flow effects of governments liberally printing money and boosting credit to stimulate their economies in response to the pandemic, but we are also dealing with the other major factor impacting business costs in Australia: supply-side issues.
Labour Shortages + Transport Bottlenecks + Production Delays + War = Supply Issues
Companies the world over are facing issues in sourcing the products and people they need to do business, and Australian firms are no exception. Skilled labour shortages – which may in part be attributed to the Great Resignation – are currently compounded by two issues impacting the supply of commodities and goods.
First, the world is still feeling the downstream effects of covid-related lockdowns, which shut down businesses throughout 2020 and 2021, causing massive transportation bottlenecks and production delays. Second, Russia’s invasion of Ukraine and the ensuing trade sanctions have seriously undercut the global supply of key commodities, especially oil and wheat.
A decreased oil supply is particularly problematic for Australian businesses because of the ripple effect it has on energy prices. Oil is still a critical source of energy throughout much of the world, so anything that reduces the oil supply necessarily increases demand for other forms of energy, consequently raising energy prices across the board.
Lowering the Cost of Doing Business in Australia
ABS data suggests that the most commonly reported business cost increases are for fuel and energy. As such, it is more important than ever for businesses to shop around and find the lowest energy prices available on the market at a given moment. For business owners who simply don’t have time to shop around themselves, Make It Cheaper can help.
At Make It Cheaper, we regularly review the energy market and work with businesses to help them take control of their energy bills and achieve potential savings. Contact us for an obligation-free review today.
Looking to save on your business energy bill?
We find savings for 4 out of 5 businesses. See how much your business could save.
With energy price increases due to take effect 1 July, when should energy customers shop around for a better deal? The answer is now – and there are 5 things you can do to help ensure your business doesn’t pay too much.
Over the past few months, we’ve witnessed substantial disruption in energy markets and a significant rise in rates across the country.
Relevant energy regulators have approved increases of between around 5% and 19% for households and businesses, depending on the location, and some retailers have already advised customers that their rates are going up by 100%+. Others have even taken the step to tell their customers to shop around for a better deal, so no-one will be immune from escalating energy costs.
Make It Cheaper’s Nathan Schofield says the issues driving this crisis, which include growing wholesale prices, increasing demand, and an over-reliance on fossil fuel energy, can’t be solved immediately.
“It requires government intervention and we need to bring more renewable energy sources online asap, so it’s not a short term fix,” he says.
So in the face of skyrocketing prices, what can businesses do to protect themselves from massive bill shock?
Engage with your provider. They’re required to give you a certain amount of notice in regards to price hikes (varying state by state), so look out for price change notifications from energy retailers.
Review your energy usage. It’s quick and easy to check your business’ meter data and audit your last 12 months of consumption. From there, you may find opportunities within your load profile to shift peak business activity to cheaper times of the day.
Compare energy plans. This is the most powerful way to take control of your bill and make sure you’re not paying too much. After auditing your usage and rates, see if you have an opportunity to move to a cheaper network tariff, with your provider or a new retailer.
Lock in long-term fixed rates. The further into the future that a business can “hedge” their electricity, the better their pricing will typically be. Long-term contracts typically present better pricing value over short-term contracts.
Check eligibility for rebates. Businesses may be eligible for rebates or grants to help deal with these escalating costs: visit the government’s rebate finder to see what’s available.
Unfortunately, many businesses aren’t noticing price rises until they receive their bill. By then, they’re already several weeks (or potentially even months) into a new bill cycle, which exposes them to higher bills for a longer period of time. That’s why it’s so important to take action as soon as possible.
Make It Cheaper’s Jenny Gordon suggests businesses should review their pricing at least once per year.
“Customers should engage with a broker to help them understand which retailers offer a bit more flexibility on their contracts… so they can capitalise on any opportunities to re-set their contract, if the market comes down again,” she says.
What are the risks of sticking with your current energy plan?
With energy prices set to soar across the country, those businesses who choose not to review their current energy plan (or who delay it) face the real risk of over-paying on their energy bills.
The process of shopping around for a better deal can take some time, depending on how big and complex your energy needs are, so Make It Cheaper’s Ryan Morse suggests ticking it off the to do list sooner than later.
“It can take a few months to find a good energy deal for the commercial and industrial sectors, while finding a small market SME energy plan can be a faster process. Either way, businesses should start their procurement process early to ensure they’re maximising their potential for sharp pricing,” he advises.
“A commercial energy broker like Make it Cheaper can offer suitable advice and help businesses know an ideal time to shop around. Small market (SME) customers are likely to see an increase [in energy bills] in the next few weeks, and should attempt to sign a fixed-term energy contract ASAP,” he advises.
Longer-term, he adds that federal and state governments should “come together to design and rapidly implement an action plan that addresses the runway cost of energy generation in this country.”
“As a country, we are 16th in the world for natural gas production and we should be welcoming the high-price of natural gas on international markets. Instead, domestic customers are suffering, as Australia lacks a fixed-reserve of natural gas for electricity generation,” he explains.
“Natural gas needs to be reserved for domestic generation first, at a gazetted rate, before any gas is exported to international markets. Natural gas is our ‘transition fuel’, touted as our solution to bridge the gap between coal and renewable generation, and should be protected by our government under a separate domestic market or reserve.”
Get an obligation-free energy review
At Make It Cheaper we constantly review the energy market, working with businesses to help them take control of their energy bills and achieve potential savings. Contact us for an obligation-free review today on 1300 957 721.
Looking to save on your business energy bill?
We find savings for 4 out of 5 businesses. See how much your business could save.
Advances in technology have changed every aspect of our lives over the last couple of decades, from the way we shop, bank and do business, to how we meet new people, order food and interact with the world around us. The energy industry has also evolved, with the biggest change being the move to more renewable generation of energy, says Fred van der Tang, CEO of energy comparison site Make It Cheaper.
“We’re seeing more and more renewable sources of energy coming into the grid, including big solar farms and hydro energy generation,” van der Tang says.
“It’s been somewhat of a slow uptake in Australia and a slow political update, but customers have embraced the evolution of technology, with 30% of Australian homes now having a solar panel on their roof… the appetite for renewable energy is only growing.”
Solar panels are better and more efficient now than they were when they first launched into the Australian consumer market in the early 2000s, with energy users getting “a better bang for your buck and bigger return on your investment” nowadays.
Big opportunity for business savings
The big opportunity lies for businesses, where the uptake of solar has been slower and the potential to save both energy and money is immense.
“For business, the rate [of install of solar] is about 10%, so we have a little way to go. But the introduction of things like smart meters means it’s possible to get more information about your energy usage, so you can tailor your usage to be more efficient.”
van der Tang says this could include things like restaurants setting up timers to turn their fridges or freezers off for certain periods, or offices ensuring that all fans, air-conditioning and lights are switched off when rooms are not in use.
With rising energy prices creating a ticking time bomb for Australian businesses, another big opportunity to reduce your energy bills is by comparing your current plan to make sure you’re getting the best possible deal for your needs.
“At Make it Cheaper, we allow businesses to focus on their business – whether that’s leading their staff, building client relationships or doing their core work – while we do the complex and time-consuming work of comparing relevant energy offers. We navigate the different codes and the jargon and make the complex easy, by presenting the customer options with real dollar savings.”
It depends on the specific situation, but MIC finds “significant savings for more than 80% of the customers we deal with”, he says.
“On average, the amount we save a business is about 8% on their annual energy bill, or $1400 a year. There’s no minimum-sized business, or a business too complex – we offer a one-stop shop and find a solution, no matter the size of the business.”
Once MIC finds you a better deal, “we take care of all the heavy lifting in terms of communicating and facilitating a transfer,” van der Tang adds.
“At the end of the day it’s more dollars in the pocket of the customers, which is an important result of what we do.”
How long has it been since you reviewed your energy plan? You could be spending hundreds (or thousands) more each year than you need to: let us help you find an energy plan that offers great value for money – contact us today.
Looking to save on your business energy bill?
We find savings for 4 out of 5 businesses. See how much your business could save.
Taking the time to review and reduce your business’s energy consumption – and therefore, how much you pay – is a task that can pay dividends today, and well into the future.
There are two ways you can help lower your business’s energy bills: shopping around for a more competitive offer, and changing how and when you use energy.
With the following five tips, you can aim to do both and enjoy the best of both worlds:
1. Use energy at the right time.
Peak energy usage times come with a peak energy usage price. The reason for this is because when more people use energy, there’s more pressure on the energy grid, and that surge in demand translates to higher prices. The good news is, energy providers are quite upfront about the fact that they charge more or less for energy consumed at different times. Start by reviewing your business energy bill to see how much energy you consume, then identify energy hot spots throughout your business, so you can start looking to shift the timing of your highest impact energy-users.
2. Adjust your habits.
A few small tweaks can make a massive difference. Some actions, like encouraging your employees to turn off lights or fans when a room is not in use; replacing appliances when they break with an energy-efficient version; or adopting energy-saving measures to adapt your energy consumption, can make a big difference on your bill. According to the Department of Industry, Science, Energy and Resources (DISER), you could save $172 a yearby getting rid of a second refrigerator, or $193 a year by switching appliances like kettles and microwaves off at the wall when not in use.
3. Focus on lighting.
One of the biggest contributors to a business’s energy bill is lighting. As well as keeping them turned off when rooms are not in use, consider installing energy-efficient LEDs, which use far less energy than halogen bulbs, without compromising on quality. You could also set lighting to a sensor or timer, or install dimmer switches to further reduce energy consumption.
4. Set temperature bandwidths.
Combat the rising costs of power during winter and summer by being mindful about the energy you use, and how you use it. DISER confirms that for each degree heating or cooling is increased, energy use increases 5% to 10%. It’s recommended to set your heating thermostat to 18 to 20°C in winter, and around 25 to 27°C in summer, to avoid churning through too much power.
5. Shop around.
In addition to all of the above, you can make a powerful dent in your business’s energy bill by shopping around for a provider that delivers better value. Compare both electricity and gas retailers, depending on your needs and goals, and review different options such as time-of-use pricing, off-peak usage, or smart meters, to see if they could help you achieve greater energy efficiency throughout your business and save money at the same time.
Are you paying too much for your energy bills? Let our team of experts review your energy bill to try and find you a plan that suits your needs and saves you money – contact us today.