Commercial energy contracts: what the fine print doesn’t tell you

Without a doubt, energy can be a significant cost of operating a business. It makes sense to review your current energy contract months before the end-date to make sure you’re getting the best deal.

Written by Kian Mohammadieh – Origin Commercial Manager, Business Contracts

When is the best time to negotiate my contract?

Historically, volatility arising from market events and seasonal fluctuations have impacted wholesale energy prices. As a result, large business operators relied on timing to secure optimal prices.

There is an opportunity however, that contracting well before peak renewal rounds, that is early January or early July, may lead to more preferred pricing outcomes for your business.

At this time, energy retailers like Origin, are finalising their wholesale energy positions, with energy buyers demanding prices. Chatting to your Origin account manager months before your contract end date allows more time to firm supply, at a pricing structure that suits your business.

Also, since pricing validity is typically short, getting an early start ensures you’ve organised any necessary sign-offs, and potentially avoid unfavourable market movements.

How do I compare charges between retailers?

Contracts can vary among energy retailers, but often charges are similar. Here are some of those charges to compare:

  • Regulated charges and pass-through charges

Regulated charges for large businesses can include AEMO charges and Network tariffs. In some cases, these costs are detailed in your bill, however it may be charged in one total amount which may be difficult for your reporting and accounting requirements.

These charges are explained on the AER website.

  • Environmental charges – is this variable or a fixed charge annually?

Environmental charges are obligations under the Renewable Energy Target scheme. SREC or Small-scale Renewable Energy Certificates, LREC or Large-scale Renewable Energy Certificates, are charged to eligible businesses. It might be important for your business to be charged annually, or incrementally throughout the year.

More information on your obligations under the Renewable Energy Target

  • Termination fees

Compare the details of termination fees and how the fee is calculated.

How flexible is your contract?

Contract flexibility is essential when it comes to expanding or changing how your business operates. Check any contract terms around the process and timings to add or remove a site. At Origin, we call this a “Roll-in contract variation” to add a site, or “Roll-out” to remove a site.

The process is straight-forward, but you’ll need to plan ahead. General timings for variations are:

  • To add a site: Contact Origin 8 weeks before you want your site operational.
  • To remove any sites: You’ll need toContact Origin 12 weeks before you want to vacate your site.

As a business operator, you’re in a position to negotiate and compare. It’s worthwhile comparing volume values between retailers. There may be daily or yearly maximums that apply. Check that the allowances cover your contracted consumption volume.

When you call us, it helps to have the following details ready:

  1. Volume of electricity or natural gas used in the last year and if you think this volume may be different for the coming year
  2. Required contract start date
  3. An active site list

Call 13 23 34 or send an enquiry

More information

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