Understand your business energy bill
Energy rates are continuing to rise. Understand your energy bill so you know where your money is going. You can then compare the market for a better energy rate.
Understand your electricity bill
We’ve broken down everything you need to know about your electricity bill.
Retail energy charges
Energy charges are the retail cost of the electricity your business used.
These may be called:
- energy charges
- usage charges.
These will be charged at:
- cents per kWh (kilowatt hour) for electricity
- cents per MJ (megajoule) for gas.
There may be different energy charges for different periods, such as:
- peak
- shoulder
- off-peak.
These charges are set by the energy retailer.
Network or supply charges
Network charges are a fixed cost for delivery of electricity to your site. This includes the cost of building, operating and maintaining the electricity poles and wires.
These charges can also be called supply charges.
Network charges are regulated. They won’t change between energy retailers.
If you’re a large energy user, you’ll have a contract demand charge as part of your network charges. This is a fixed cost for a set amount of power supplied to your business.
You can renegotiate your contract demand charge if your actual demand is lower than your contract demand over a year. Contact your energy retailer to discuss.
If you’re a small business, you may not have a contract demand charge.
If you’re being charged in kVA (kilovolt amps) consider investing in power factor correction equipment. This equipment will improve your power factor and correct supply inefficiencies. This will, in turn, lower the amount you pay for your network charges.
Metering and service charges
Metering and service changes are a fixed cost for maintaining the energy meters on your site. These charges are set by the energy retailer but can be negotiated.
You may be charged for:
- installation
- maintenance
- special meter readings
- inspection fees
- upgrades
- connection
- disconnection.
Metering and service charges might sit in ‘Other charges’ on your bill.
If you’re a small business, these charges may be built into your retail energy charge.
Regulated charges
Regulated charges are for the operation of the electricity market and set by the Australian Energy Market Operator (AEMO). These charges are passed onto the consumer.
Environmental charges
Environmental charges are a fee energy retailers incur to meet their legislative requirements under the Renewable Energy Target. These fees are passed onto the consumer.
These charges are regulated by the government. Though they may change between energy retailers. They may be charged either as a fixed percentage, or a percentage based on the Clean Energy Regulator.
If you’re a small business, these charges may be built into your retail energy charge.
Understanding your gas bill
We’ve broken down everything you need to know about your gas bill.
Energy charge
Energy charges are the retail cost of the gas your business uses in gigajoules (GJ).
These may be called:
- energy charge
- commodity rate.
If you’re a large gas customer, these charges can make up for most of your bill.
There are two main tariffs.
If you’re a small gas user, you’ll be charged a V tariff, which means you use less than 10TJ per year. Most of the tariff gets bundled into the energy charge.
Nearly all small users still have manual reading. This means you won’t be able to get hourly data on your gas usage.
If you’re a large gas user using more than 10TJ of gas per year, you’ll be charged at a D tariff.
Most D tariff customers will have data loggers or flow computers that are able to be used to plot daily profiles. This means you’ll be able to get hourly data on your gas usage, to analyse and identify improvements to gas consumption that you can make.
Overrun charge
Overrun charge is incurred if you exceed your Maximum Daily Quantity (MDQ).
The Maximum Daily Quantity is the maximum amount of gas that is made available to you at your contracted rates. If you exceed that amount, you’ll be charged at a different rate.
Make sure your equipment is running efficiently to avoid overrun charges.
Transmission charge
Transmission charge is a fixed cost of maintaining the gas infrastructure.
Distribution charge
Distribution charge is a fixed charge for the delivery of gas.
Regulated charges
Regulated charges are market charges controlled by Australian Energy Market Operator (AEMO), which include:
- energy charge (cents per GJ)
- Full Retail Contestable (FRC) costs (cents per day), which is a charge that allows you choice in gas retailers
- Meter Data Management (dollars per day), which is a charge for meters.
Environmental charges
Environmental charges are a fee energy retailers incur to meet their legislative requirements under the Renewable Energy Target. These fees are passed onto the consumer.
These charges are regulated by the government. Though they may change between energy retailers. They may be charged either as a fixed percentage, or a percentage based on the Clean Energy Regulator.
These charges are used to deliver the Victorian Energy Upgrade program. The program offers businesses discounted energy-efficiency products and services.
Other Charges
Other charges can include retail service fees, dependent on your retailer. These are charged at dollars per day.
Get a better rate
Now that you understand your bill, you can find a better energy deal to save money in your business.
The best time to look for better energy rates is at least one month before your existing contract expires. You may receive information from your current retailer when your contact ends. It’s worth calling your retailer to see when it ends, or ask how much it’ll cost to cancel your contract earlier.
Compare the market
If you’re a small business, compare the market against your current charges with the Victorian energy comparison site.
If you’re a medium or large business, you have a few options.
- Negotiate an energy contract that’s tailored to your business’s needs with your energy provider.
- Hire an energy broker to help you find the best energy rate and simplify the contract details for you.
Find an energy auditor. - Group together with other businesses or an industry association to purchase power in ‘bulk’ for a better rate.
- Talk to your energy retailer about a Power Purchase Agreement. In this agreement, your energy retailer will install renewable energy on your site and you’ll pay a lower rate for electricity.
Learn more about a Power Purchase Agreement.
Things to consider
Switch to green power
When you switch to green power, you’re supporting Australia’s renewable energy industry.
Green power customers have collectively saved more than 18 million tonnes of greenhouse gas emissions from Australia’s energy industry.
When you switch to green power through an accredited renewable energy product, the energy retailer will purchase the equivalent amount of renewable energy. This means there’s more:
- clean energy in the grid
- demand for renewable energy generators
- jobs needed in the industry.
Learn more on the green power website.
Make your business energy efficient
Before you switch energy providers, it’s worth assessing your business to find ways to be more energy efficient.
When you enter a new energy contract, you agree to a set amount of energy being supplied to your site. If you use significantly less power than agreed to, you’ll still be charged for the power that’s not used.
Some providers offer ‘full flex’, which means they’re flexible and you only pay for what you use.
The flexible offer may be at a higher rate, but is worth considering, as it could pay off in the long run.
Make sure you read the terms and conditions of the contract carefully, or ask your energy consultant.
Find ways to reduce your energy use
Consider a longer contract
When looking for a new energy contract, you’ll typically have the choice between one, two and three-year energy contract terms. Three year contracts may have a more competitive offer.
Ask about your feed-in tariff
If you have solar PV on your site, ask what feed-in tariff (FIT) the energy retailer is offering.
If you don’t use all the power from your solar PV system, it will get pumped into the grid. The feed-in tariff is a credit for that power.
Feed-in tariffs are another way solar PV can save your business money.
