Energy retail offers
If your business energy consumption is similar to that of a household, or just a few times larger, for example, a café, use similar arrangements to your home for 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 choose 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 – however, you will need to have been in your premises for at least 12 months to do so. If not, you can still shop around for a better deal.
Some businesses 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 uses tens or hundreds of times more power 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 specific needs and considers your unique circumstances, including your demand profile, location, consumption and other factors. You can negotiate these types of market contracts with an energy wholesaler.
There are many 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 buying 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. They understand the commercial energy business, are independent and will constantly monitor gas and electricity market prices to help you get the best energy deal.
Getting the lowest energy price may be your top priority when renewing your energy contract, but 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 buy ‘bulk’ energy, in contrast to when you negotiate on your own.
Power Purchase Agreement (PPA)
A PPA is a contract to buy 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 retailers, 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, your business can reduce energy costs. It also means you are stimulating the growth of clean technologies and meeting sustainability commitments.
There is more information on energy efficiency at 10 tips to manage energy costs.
Page last updated: 28/02/20