Finding A Suitable Energy Plan For Your Small Business

Each year, Australian small businesses spend more than $10 billion on electricity and gas¹ – and rising energy prices may be putting these businesses under pressure.

Escalating energy costs are a genuine concern for small businesses

As part of its 2018 Retail Energy Competition Review², the Australian Energy Market Commission (AEMC) found that while new providers are entering the market, this competition is not delivering expected benefits to energy users.

With annual electricity bills for small businesses increasing between 5-28% in the second half of 2017², there’s no doubt that rising energy costs are taking a toll on small businesses across Australia.

If you’re a new business or have recently moved premises, your energy provider may use the historical energy usage³ of that site to estimate your annual usage. If your business is very different to the one located at that premises prior to you, it’s a good idea to conduct an energy assessment as soon as you can after moving in.

Understanding small business energy costs

Small businesses pay more for energy than consumers⁴, and generally use more of it. For this reason, it’s critical that business owners have a clear picture of their energy usage and understand their energy bill fully.

You may be able to achieve significant cost savings for your business simply by ensuring that you’re on an energy plan that's suitable for you, or using iSelect’s energy comparison service to find a new one from our range of providers*. The first step to better understanding your energy usage is to conduct an energy assessment to find out where your business uses the most energy.

1. Conduct an energy assessment

A thorough energy assessment will allow you to⁵:

• Better understand your business’s energy usage
• Identify ways to reduce your energy usage
• Reduce energy costs
• Improve productivity
• Reduce your environmental impact

You can conduct an energy assessment yourself, or appoint an external expert to do it for you⁶.

2. Negotiate a better energy plan or switch providers

Once you understand your peak, off-peak and total usage, ask your current energy provider whether you’re on the right energy plan for your business. You can also compare energy plans with iSelect to see if there’s a plan which better suits your needs from our range of providers*.

3. Look for ways to reduce your energy usage

Armed with your energy assessment, you can identify ways to reduce energy usage across your business. Some quick and easy changes you can make are:

• Switch off and save – standby power could account for up to 10% of your total electricity use⁷. Make a list of all appliances that can be turned off at the end of the workday – do you need your wifi, printers and photocopiers to be powered up when you’re not around? Smart power boards, plug timers and smartphone apps are inexpensive tools that will allow you to automate your ‘switch off’ process.
• Cut your lighting bills – The lights you use in your home have been found to consume about 8-15% of the average household electricity budget⁸. You can save money by maximising the use of daylight, switching to more energy efficient lighting and installing motion sensors and timers that control your lights.
• Manage your heating and cooling – double glaze your windows, insulate walls and ensure all doors and windows are sealed.

How is small business energy use calculated?

Most small business electricity bills will have two main parts – a daily supply charge (a fixed cost) and a usage charge (a variable cost that reflects your usage). The supply charge will be applied regardless of whether you use any energy. The usage charge will reflect the amount of energy you’ve used⁹, multiplied by a price per unit. This price per unit can vary depending on several factors, such as where you live, when you use your electricity, and what sort of contract you’re on⁹.

Your energy agreement will outline one or more of the following tariffs which apply to your business:

• Single or flat rate tariff – you’ll be charged the same price per kilo-watt hour (kWh) regardless of the time of use
• Time of use tariff – you’ll be charged different a price per kWh during peak, off-peak and shoulder periods
• Demand or volume tariffs – you’ll be charged based on the maximum amount of energy that you use or the capacity required to supply your energy needs. This is generally measured in kilo-volt-ampere (kVA).
• Block tariffs – you’ll be charged based on the total amount of energy that you use

Green energy plans for small businesses

Green or renewable energy is energy that comes from natural resources such as the sun, the wind, water and waste. Today, about 11% of Australia’s energy comes from renewable sources¹⁰. This includes energy from the sun, wind, water, and biomass waste.

By using green energy, you can reduce your business’s impact on the environment and support the growth of Australia’s renewable energy sector. To go green, you can give us a call on 13 19 20 to talk about how much green energy you’d like to use as a percentage of your business’s total energy use.

Need help with finding an energy plan for your business?

Finding an energy plan for your small business can be confusing. To compare energy plans from our range of providers* and see how much you could save, call iSelect now on 13 19 20.

Sources:
1. http://energyconsumersaustralia.com.au/wp-content/uploads/SME-Retail-Tariff-Tracker-Preliminary-Report-October-2017.pdf
2. https://www.aemc.gov.au/sites/default/files/2018-06/Final%20Report.pdf
3. https://www.energymadeeasy.gov.au/get-energy-smart/energy-and-your-business/energy-usage-new-businesses
4. https://www.aemc.gov.au/news-centre/media-releases/small-businesses-struggle-deal-energy-retailers
5. https://www.energy.gov.au/business/conduct-energy-assessment
6. http://www.eec.org.au/for-energy-users/find-a-provider#/find-a-provider
7. https://www.energy.vic.gov.au/about-energy/your-bill/keeping-your-energy-bills-in-check
8. http://www.yourhome.gov.au/energy/lighting
9. https://www.energy.gov.au/households/understand-your-energy-bill
10. https://www.greenpower.gov.au/Business/Common-Questions/