ELECTRICITY CONTRACTING EXPLAINED

Electricity Contracts The type of electricity contract for your business will depend on the volume of electricity your business uses. Larger businesses with high electricity usage where they are typically spending more than $30,000 per annum, or have usage greater than approximately 100MWh per annum will enter into a tailored contract that suits their specific business needs. A large business can discuss their requirements with a retailer or an intermediary and enter negotiations to obtain a customised quote for their electricity.

Smaller businesses using 100 MWh of electricity or less and typically paying under $30,000 per annum can choose between two types of energy contracts – Standard and Market Retail Contracts.

Standing Offer (or Standard Retail Contract) This may apply by default when you have not explicitly signed up to a Market Retail Contract. These contracts have set terms and conditions that can’t be changed by the retailer. If you have never changed your electricity retailer by signing up to a Market Contract, you will be on a Standing Offer. You might find that your business is on a Standing Offer with your electricity retailer if you have moved into premises where the previous tenant was being supplied by a particular retailer and you took the account when you moved in. Sometimes you might default to a Standard Retail Contract, although it is generally more expensive than being on a Market Retail Contract. If you see the words Standing Offer on your electricity bill, it is likely that you are paying more than you need to for your electricity. A Market Retail Contract is a contract between you and an electricity retailer that you have selected that may offer a better price or benefit than a Standing Offer.

Market retail contractThese have a minimum set of terms and conditions, but other terms and conditions can vary from contract to contract. Your business might not be eligible for all market retail contracts offered by retailers but you can shop around to see what offers are available to you, in your geographic area, and for your meter type.

Market Retail Contracts may cost less, offer renewable energy or discounts, and may have fixed

contract durations. Depending on the retailer you chose, other fees, such as exit fees may apply.

The terms and conditions of market retail contracts generally vary from standing offer contracts. For example, market retail contracts may also include:

• different price options

• different billing periods

• different payment options

• different contract terms

• depending on the retailer, other charges may apply

Market retail contracts also include renewable energy contracts, such as GreenPower energy contracts and solar contracts. Market retail contracts differ between retailers and it is advisable when choosing a market retail contract to shop around for one that is going to work best for you.

Understanding market retail contract prices Prices under market retail contracts are set by energy retailers. Retailers may offer a number of market retail contracts with different prices, incentives and other terms and conditions, so it’s wise to take the time to understand the differences and compare retail offers.As with any supplier for your business, it is important to understand the actual price you pay, so this can mean comparing tariffs after discounts are applied and sometimes other confusing offers retailers may use to attract customers. It pays to look at the bottom line.What’s important for your business is to make sure you understand the actual price you pay in cents per KWh. That way you can make a fair comparison for your business and the best decision for your business needs.

Comparing retailersThere are several available tools which can assist small businesses when shopping around or switching retailers. It is recommended to look at your last couple of energy bills to work out your energy usage and how much you are paying. This will help you to compare offers from different retailers. Cents per KWh is the best way to measure the real cost of your electricity and to accurately compare prices.

Chamber of Commerce & Industry Queensland375 Wickham Tce, Spring Hill QLD 4000www.cciq.com.au 1300 731 988

Proud partners of CCIQ

Before you decide to switch retailers you should:

• visit the Australian Energy Regulator’s energy price comparison website, Energy Made Easy www.energymadeeasy.gov.au

• review your own past bills to understand your energy usage, and the actual price you pay (in cents per KWh) as this will assist in comparing offers from different retailers

• check the facts and consider the details of the offer from the retailer including the length of the contract, actual price per KWh, exit fees, billing and payment arrangements and any incentives that apply

• ask yourself questions, like: “Is this the right deal for me based on my business’s energy use?” and “Do I have enough information to decide?”

• find out if you need to pay a security deposit and how much it is

• if signing a dual fuel contract for electricity and gas, check whether you will receive one bill covering both fuels or two separate bills

• check what methods of payment are accepted (direct debit, credit card, electronic transfer)

• ask if there are any extra fees and charges for these different payment methods.

For more information visit www.energymadeeasy.gov.au

The following are key points to remember when switching retailers:

• understand the actual price you will pay, (ie: the price per KWh) as discounts can be confusing and make it hard to compare offers

• check if early exit or termination charges apply with your current retailer before you sign a new contract

• your existing contract is automatically cancelled and you will be sent a final bill from your old retailer

• it may take a few months to switch retailers as it may occur on the date of your next meter reading

• if you want a meter reading before your next scheduled meter read date you can ask your retailer to arrange this for you. There may be a cost associated with a special or extra meter reading which may be charged to you

• after you agree to switch to a new offer, the retailer must send you a copy of the contract. This will include all the terms and conditions of the contract. Ensure the terms and conditions match what you agreed with the retailer

• check your first bill from your new retailer to ensure it reflects what you and your retailer agreed.

Do your research first. Understand what you’re already receiving and find-out any implications for switching retailers.

Chamber of Commerce & Industry Queensland375 Wickham Tce, Spring Hill QLD 4000www.cciq.com.au 1300 731 988

Proud partners of CCIQ