Network tariff changes provide opportunity to review energy bills

A recent survey by energy management company Energy Action revealed that more than 87% of businesses ranked price the most important consideration when selecting their energy retailer. However, the cost of energy itself is only one portion of the overall price that an organisation pays for its energy supply.

Typically, energy charges only make up 40-50% of a bill, with the remainder made up of network, environmental and other service-related charges. The tariffs for network charges vary according to the amount of electricity consumed and when it is used. Network tariff charges are reviewed annually to reflect the fluctuating costs of transporting and distributing electricity, and maintaining the infrastructure required to run the network.

As network charges make up a sizable part of an organisation’s energy bills, switching tariffs can, in some cases, result in significant savings. Despite the fact that organisations are free to choose the best tariff for their needs, many organisations do not review their tariff when uplifts are applied to ensure they are remaining with the best option. It’s a complicated process to navigate and, as a result, many organisations may be foregoing additional cost reductions. Additionally, as network charges are applied based on your consumption, implementing energy-efficiency initiatives to reduce your usage effectively catapults your savings across your bill by reducing the overall impact of these charges.

In July, NSW, Qld, TAS, SA and ACT had their annual network tariff reviews. This provided Australian businesses with an opportunity to ensure they are making the best cost savings possible. Energy Action’s Activ8 is an energy monitoring and contract management service which provides customers with annual reviews to ensure they are on the correct tariff. In the January review of Victorian network tariffs, Energy Action found significant savings could be made for many clients who were eligible to change to a more favourable network tariff. Energy Action highlighted potential savings for its Activ8 customers of more than $1.2 million. Activ8 customers identified as being able to change to a more favourable network tariff to secure further savings were able to achieve average savings of $5800, with some even in excess of $20,000 per annum.

Valerie Duncan, Managing Director of Energy Action, said that with both the network tariff changes and introduction of the carbon tax on 1 July, “now is the perfect time for Australian businesses to review their energy contracts and start thinking about what changes can be implemented to secure savings and achieve greater energy efficiency”.

“Of course, changing your tariff is only one way to save on your energy charges. Most organisations can also find other quick-win efficiencies and should also consider securing future energy rates by negotiating a forward contract well before your current agreement expires. Reviewing your tariff is just one available option to consider when trying to reduce your energy bill,” she said.

Network tariff reviews are just one part of the services Energy Action provides to Australian businesses. This service also helps monitor spend and usage, achieve cost savings and identify opportunities for energy efficiency in their operations. Other services include securing the best value energy contracts, monitoring and assessing energy information and consult on sustainability projects.