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Electricity and gas plans for small businesses

Electricity and gas plans for small businesses | RateCity

Energy makes up a large part of the expenses that you need to consider when running a business. Effectively managing these costs could help you boost your business’s profitability. To help you manage these costs, you can compare business gas and electric plans from various retailers and select the right business energy plans for you. It's a good idea for you to understand your business’s energy consumption patterns, no matter its size, and identify ways to reduce costs. 

Businesses typically consume more energy than homes, and retailers, therefore, offer them commercial energy plans or customised ones tailored to their specific needs. Some energy retailers also offer additional services such as a single point of contact, dedicated lines, smart billing and other features designed to make life easier for business owners. The meters used by businesses are different from those at residential properties as they’re configured to handle a higher energy load. 

You can see details about the various plans on offer by different providers on their respective websites and select one that provides you with the best gas and electricity rates for your business. There are different providers and, therefore, different offers in each state or territory, or region.

Are you a small business or a large and industrial energy user?

The plans, features and prices offered by energy retailers to businesses with small power requirements are different from those offered to large or industrial businesses that use more power. There are regulations that govern energy for large businesses, so retailers have particular plans or options for them. But what makes your business a large business vs a small business when it comes to energy?

The government defines large energy users as those that consume over 0.05Pj per year. Energy providers may have their own classification criteria, however, so make sure to check with them. For instance, some retailers consider businesses that use around 100 megawatt-hours (Mwh) of electricity or spend over $30,000 per year to be large market customers. Others define large businesses as those having over ten sites or spending over $30,000 on electricity and $50,000 on gas each year. 

Check whether your area’s energy retailers would consider your business a large or small business based on your energy consumption. You can then find the top business gas and electricity prices and features you can get. 

What are the types of small business energy plans on offer?

When you choose a plan from an energy retailer, you enter into a contract. If you run a small business, there are mainly two types of contracts available:

  • Standard retail contracts, also known as standing offers:

This is a basic energy plan with fixed prices that usually change once every year and generally has no discounts attached. In many cases, the price in a standard contract is set by the government and called the regulated price. 

  • Market retail offer:

These are contracts in which the energy retailer sets the price, and it’s usually lower than the standard offer price. Market retail offers usually include a discount that will be applied to your rates for a limited time. The energy company sets the price which means your rate can change at any time. 

Small businesses can receive advice about the cheapest business gas and electricity rates and learn how to reduce their consumption through the government’s Business Energy Advice Program

What are the types of charges you would see in a small business gas and electric bill?

1

Type of contract signed

Your usage charges would be based on the type of contract you have signed. Small businesses often have the choice between a flat-rate contract and a time-of-day one. In a flat-rate contract, you pay the same rate no matter what time of the day or day of the week you consume power. If you opt for a time-of-day contract, you’re charged different rates depending on whether you consume during peak, off-peak or shoulder times. Rates are lower during off-peak times, such as overnight or on the weekends. A time-of-day contract is best for businesses that use more energy during off-peak periods like at night or on weekends.

2

Controlled load option

Another option that may be available is a controlled load option. A control load rate is charged based on the usage of specific equipment such as pumps, heaters, freezers etc. If you opt for this, you’ll have a separate meter for this equipment, and you may be charged a lower rate, especially if you can operate the equipment during off-peak hours.

3

Demand charging plan

If you can reduce your power consumption during peak hours, you could also explore a demand charging plan. In such a plan, the rate you pay will increase if your consumption crosses the demand limit.

4

Feed-in tariff

If you have a solar power system, you could explore if the retailer offers a feed-in tariff. This is when unused power is sent back to the grid, and the solar feed-in tariff will be deducted from your bill or paid to you if you’ve not used any power from the grid. 

5

Seasonal rate plan

The price of gas is regulated in most states and territories. When it comes to your gas bill, your retailer may charge different rates if you’re on a seasonal rate plan. They could possibly charge a higher rate during the peak season, which is winter. If your contract has a non-seasonal gas tariff, then you’re charged the same amount year-round.

What are the commercial gas and electric offers for large, and industrial-sized energy users?

Energy retailers offer a range of services and features to large and industrial customers to enable them to optimise their power consumption and improve the grid’s stability. You can speak to multiple retailers and ask them to draw up an energy solution that works best for your business and consumption pattern. 

Some of the features retailers may offer large and industrial-sized businesses include;

  • Portal:

Some energy providers have a portal for large business users. This portal allows businesses to monitor energy use, market prices, and spend. This data can then be used to calculate the viability of renewable energy.

  • Power factor correction units:

Installing power factor correction units is one more feature that retailers may offer large businesses. The power factor is the ratio of the actual power that your business consumes compared to the total power supplied from the grid. So when the power factor is closer to 1, it means that your business is consuming electricity efficiently. If you need to increase your power factor, then installing a power factor correction unit achieves this. It also improves the power quality and reduces costs. Find out whether a power factor correction unit will benefit your business, especially if you have been having problems such as equipment failure, overheating, tripping, instability, and high energy consumption and costs. Your retailer could conduct a thorough check and then recommend your course of action. 

  • Demand response:

Have a discussion with your energy provider and determine whether opting for demand response will lead to savings for your company. A demand response program incentivises you to shift your consumption time to improve the grid’s stability.

  • Billing:

Your energy provider may be able to provide smart billing that allows you to track budgets, set alerts and analyse your consumption. Some retailers offer eBilling that is compatible with popular accounting software packages. 

Besides the above features, many retailers offer business users a dedicated helpline or a single point of contact like a sales representative to help deal with any issues or concerns.

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This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

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