Energy retail offers
If you have a business with energy consumption similar to a household or just a few times larger, for example, a café or retail store, you can use similar arrangements to your home to arrange energy contracts. Each energy retailer will offer a range of contracts, each with set terms. These contracts are either:
Market offers – which are the competitive offers from the energy retailer, which may include discounts, fixed price periods or other arrangements. Make sure you check any terms and conditions, for example, exit fees, to ensure they suit you.
Standing offers – are the contracts with minimum terms and conditions set by law.
If you don’t negotiate the terms of your contract with your retailer, but pick an existing offer which best suits you, then your business is most likely on one of these types of contracts. You can use Victorian Energy Compare to find the best deal.
To use Victorian Energy Compare, you will need to have been in your premises for at least 12 months. If you haven’t been at your site that long, you can’t use Victorian Energy Compare, but you can still shop around for a better deal.
Some businesses located in shopping centres for example, may be part of an embedded network and may not receive a bill from an energy retailer but from the building operator. The operator of the embedded network must comply with legal requirements including maximum rates. There is more information on licencing at Essential Services Commission.
Negotiated market contracts
If your business’ energy consumption is tens or hundreds of times larger than a household, for example, a large restaurant or a factory, you have an option to negotiate an individual energy contract with an energy retailer.
By negotiating directly, you can ensure your energy contract is tailored to your needs taking into consideration your unique circumstances, including your demand profile, location, consumption and other factors. Usually, consumers negotiate these types of market contracts with an energy wholesaler.
There are multiple ways you can negotiate a market contract to make sure you get a deal that suits you. Find out more about energy contracts at Energy Victoria.
One-on-one negotiations with an energy provider (retailer or distributor)
Direct negotiation with an energy provider is the standard way of purchasing energy. Your business can work with a retailer or distributor to discuss your contract.
Engage an energy broker
There are good reasons for engaging an energy broker. Energy brokers have a deep understanding of the commercial energy business. They are independent and will constantly monitor gas and electricity market prices to help their clients obtain the best energy deal.
Securing the lowest energy price may be your top priority when renewing your energy contract. However, the terms and conditions of supply are similarly important, and an energy broker can help you. Terms and conditions should be carefully reviewed and negotiated, especially in the current volatile gas and electricity market.
A group of businesses can approach energy providers to negotiate the best deal. An industry association or one of the businesses will usually act as a leader. Group purchasing will increase your negotiating power as you will purchase ‘bulk’ energy, in contrast to when you negotiate on your own.
Power Purchase Agreement (PPA)
A PPA is a contract to purchase energy between a renewable energy developer or energy retailer (virtual PPA), and a buyer or group of buyers. This involves a long-term commitment to buy energy which helps finance a wind or solar energy project while securing a reliable, affordable source of clean energy for the buyer.
A PPA allows buyers to enter into delivery contracts directly with renewable project developers or retailer, securing a long-term and predictable source of energy over the life of the PPA (10-20 years). By hedging against the rising costs of conventional energy, companies can reduce their energy costs. It also means that they are stimulating the growth of clean technologies and meeting sustainability commitments. The PPA is typically suitable for large energy users.