When to renegotiate electricity supply agreements
If you were aware that energy supply charges can vary by 20% in a calendar year, would you pay more attention?
For larger customers, electricity supply agreements are generally drawn up for a one, two, or three year period. Most customers routinely re-sign the agreement at the end of the contract period, unaware of the substantial benefits that could be gained from renegotiating the supply agreement sooner. Here we uncover the factors that could greatly affect electricity costs for your retirement facility.
Timing of procurement
Most energy supply agreements are offered for the duration of a calendar year, commencing in January and expiring in December. What is not commonly known is that the wholesale market rate can vary by 20 – 22% during the year, with the lowest market rate generally occurring during the months May through to August.
It is therefore important to understand that the rates in your supply agreement are greatly impacted by the time of year that you choose to search for a new deal. We recommend that customers aim to renegotiate their supply agreements within the May to August period, or approximately eight months prior to their energy contract expiring – this could secure savings of up to 20%.
Length of Contract
Contract lengths can vary between one and three years, however in a volatile market where developments in technology, resource availability and the political landscape affect electricity market rates, we advise customers not to commit to contracts longer than 12 months. Unfortunately we have seen instances where customers are pushed into longer-term contracts.
Generally this contract period is not in the interest of the customer but instead provides a broker with long-term commission gains. We recommend customers to only sign up to a 12 month contract, this will provide you with the greatest opportunity to negotiate the best price.
Network Charges
Network charges are the costs covered by your network provider to deliver power to your property through their poles and wires. Network charges must be reviewed on a regular basis to ensure that the most appropriate and low-cost tariffs are assigned. It is necessary to engage an experienced professional to assign charges correctly.
Savant Energy have a highly experienced team of energy brokers, and can help customers to find the best rates in their electricity supply agreements. Call Darren Lines today on 0427 635 149 or visit our website to find out more about how we can help you find the best possible rates.
*The information contained in this article is of general nature. It is not intended as financial advice