See how MGA's energy partner can help you get the most value and savings on your energy bill.
Below is an example of a commercial and industrial (C&I) bill, along with the sections that should be reviewed.
The price you pay for your energy service includes the tariff and any other fees and charges that may apply under your contract. Tariffs listed on your bill do not include GST - this is added to the total amount owing at the end of your bill.
The tariff is the amount you are charged for the energy you use. Tariffs vary dependent on who your energy retailer is and which contract you are under. Tariffs include both fixed and variable charges.
The fixed charge Is not based on how much energy you use. It will be separately identified on your bill, and is often called the ‘daily supply charge, metering charge’ or ‘service to property’ charge. It can be displayed as a daily rate on your bill (e.g. in ‘cents per day’), but may appear as a single figure for a billing period.
The variable charge or ‘consumption charge’ is the amount you pay for each unit of electricity and gas you use. It is listed on your bill as cents per kilowatt hour (c/kWh) for electricity and cents per megajoule (c/MJ) for gas.
Note: It is important to note that different variable charges are also factored when it comes to large commercial users: All electricity bills look different as the layout varies from retailer to retailer and state to state and contracted volume. For C&I contracts it is important to scrutinize each line on the electricity bill since it is possible to re-negotiate the majority of the bill.
Charges for the consumption of electricity used for the billing period & the contract rates from your energy provider.
These are the terms for the three periods that tend to be used to define different pricing brackets based on when you use your electricity.
The price of electricity is highest during this period as this is when the demand for electricity is at its highest.
This period can be charged at a reduced rate to reflect the reduction in demand, but some electricity companies charge at the same rate as the peak charge. The shoulder is only charged in ACT & NSW.
Off Peak Rates
This period is the cheapest as it is being supplied at the times when the demand for electricity is at its lowest.
A certain time of electricity usage costing the most per kWh. The time for peak varies from state to state but will always be during the day.
It's possible to renegotiate these rates before the end of your contract – and without paying a break fee.
In the electricity bill below, Aussie NRG has renegotiated the current electricity rate mid-term show the rate reduction highlighted below.
The amount of energy consumed on the site has dramatically increased, but with the renegotiated rates, savings were still possible. Under the previous rates, with the increased quantity, it would have cost $6,564 for Peak and $4,175 for Off-Peak totaling $10,739. This highlights a $2,001 savings for Peak & $908 for Off-Peak. This equates to a total saving of $2909 this month for this site.
The market charges / regulated charges are charges from the Australian Energy Market Operator (AEMO). They are non-negotiable and are passed through from AEMO and the Energy Regulator. These costs cannot be inflated by energy retailers and are calculated in accordance with the National Electricity Rules, and AEMO pricing methodology.
This is charged for the operation of the National Energy Market.
This is charged for the national electricity market grid’s system, frequency, and security.
The Participant charge is updated yearly but the Ancillary charge is updated monthly.
Australian Energy Market Operator (AEMO) Charge
Australian Energy Market Operator modifies load export charges (MLEC) recover the costs associated with the use of network operator assets considered to support inter-regional flows to neighbouring regions. These charges are calculated in accordance with the National Electricity Rules, and AEMO pricing methodology.
Metering charges can definitely be negotiated as the metering charges can vary greatly in prices. In many cases, saving opportunities can be achieved by just negotiating this section.
The average price of metering is about $1300.00 ex GST per year, some companies inflate these prices to over $4000.00 per year.
This is charged by a third party company and the charges are then passed on to the retailer through the bill. The important thing to note is that there are many metering companies and each one has different rates they charge for access to the meter per day.
Contrary to the belief that this part of the bill is not negotiable, the reality is the Environmental Charges can be negotiated. For example, some retailers will offer either a fixed or variable rate.
Some retailers have also been known in to inflate these charges while lowering the Peak and Off-Peak rate to make their rates look cheaper but recoup the shortfall from the inflated environmental charges.
Environmental charges are set by the government to help fund renewable and environmentally sustainable projects such as roof-top solar such as LRET or SREC depending on the state you are in. It is important to note that the government only mandates a certain amount and does not enforce the amount set by the retailer, meaning retailers can also inflate this to their advantage.
Network Charges can be negotiated but there are certain factors that must be considered and actioned on before savings can be achieved. We need to look at the Network Tarification and the Network Max Demand load and to do a load reset. Below is an example of what a bill can look like after a Network Demand Reset.
Max demand charge and network charge
The maximum kVA demand recorded or calculated for a billing period (generally one month) will form the basis of the Demand Charges in that period. Peak Demand is a measure of the highest amount of electricity drawn from the network (grid) at any one time. This is usually over a 15 or 30-minute interval. Demand is charged by the Network Operator and is passed through by your energy retailer.
Power Factor is a measurement of how effectively incoming power is used in your electrical system and can be defined as the ratio of real (working) power to apparent (total) power.
From the comparison above, looking at the ‘Network Charges’ and the ‘highest metered demand,’ significant savings can be achieved, and from the example above the amount is about $8,986.80 per annum.
What is power factor?
'Real Power' (kW) is the power that actually powers the equipment and performs useful, productive work. It can also be called 'Actual Power', 'Active Power' or 'Working Power'. Whereas, 'Reactive Power' (kVAR) is the power required by some equipment (e.g. transformers, motors and relays) to produce a magnetic field to enable real work to be done. It’s necessary to operate certain equipment but you don’t see any result for its use.
'Apparent Power (kVA) is the sum of Real Power (kW) and Reactive Power (kVAR) and is the total power supplied by your retailer through the mains and is reflect on your bill and the amount you pay.
Power factor Correction (PFC) aims to improve power factor, utilizing capacitors to offsets usually inductive loads, such as machinery motors. PFC systems increase the efficiency of the power supply, delivering immediate cost savings on electricity.
Contact the MGA Energy Team for your obligation free assessment.
Even if you are in a contract, you may be eligible for a renegotiation allowing you to benefit from a lower price almost straight away.
Simply fill in the form and add a copy of your latest bill for us to review and we will be in touch to discuss the results.