Choosing the best energy plan for your business involves more than finding the lowest rate per kilowatt-hour or megajoule of gas. You also need to consider things like demand charges, the benefit period, network charges, discounts and exit fees, usage rates over different time frames, and more.
To cut through the complication, we’ve highlighted two key factors to consider when comparing energy plans.
Factor 1: Benefits and the benefit period
Today’s energy plans often come with benefits. These can be anything ranging from discounted usage rates to tickets for music concerts and sports matches. So, when you’re comparing energy plans, it pays to factor in the added benefits you’ll get with each plan.
But it also pays to factor in the benefit period. Benefits typically come with fixed-term energy contracts. For example, you may get electricity at a discounted rate for 12 or 24 months. At the end of this period, the contract will automatically roll over, starting again for a similar period. However, the benefits that came with the initial contract – such as the discounted usage rate – may not roll over. And so, if you’re choosing an energy plan because of its benefits, be sure to clarify the benefit period and what will happen to your perks when it ends.
A related consideration is exit fees on fixed-term contracts. If you’re signing up with an energy supplier for 2 - 4 years, say, it pays to know what will happen if you break the contract. Will you be penalised to the point where you’d be better off opting for an ongoing contract with no exit fees from the start?
Factor 2: Charges other than the usage rate
The most obvious charge on an energy bill is the usage rate: the amount you pay in cents per kilowatt hour (c/kWh) for electricity and cents per megajoule (c/MJ) for gas. A lot of customers think their bill is simply the sum of how much energy they use at this rate. But if you look closer, you’ll see that other charges have a sneaky hand in what you end up paying.
“Demand charges” are a prime example. Your demand charges are determined by how much “stress” your energy usage puts on the grid at a given moment. If you use a lot of energy at the same time as everyone else (e.g., between 10am and 12pm on weekdays), you will be charged more for it than if your usage is evenly distributed over 24 hours.
That’s why your bill equals more than “total energy used at a given rate.” So, when you consider your energy bill includes not only demand charges but also network charges, environmental charges, and more, it’s clear you need to look beyond the usage rate when comparing plans.
A useful tip in this respect is to calculate how much you’re being charged for your energy usage over different time frames. Your usage rate tells you how much you “technically” pay in c/kWh or c/MJ, but if you calculate your costs on a daily, weekly, monthly, or even annual basis, you’ll get a much clearer picture of what you’re really paying.
The benefits of talking to experts
As you can see, despite our attempts at simplification, there’s still a lot to consider when comparing energy plans. That’s why we recommend that, if you’re short on time, you should outsource the task to experts.
At Zembl, we help businesses buy better. Our dedicated team of energy experts know the Australian market intimately and can assist you in cutting through the admin and finding the best plan for your business. Check out our website or call us today for an obligation-free assessment.
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