When to Negotiate Electricity Contracts
When negotiating and renewing electricity contracts, it is all about timing. Securing a contract when the market is low is the key. There is no need to wait until your contract expires and this is where Watt Utilities can help.
Electricity contracts are like the stock market – they have ups and downs and volatility in trading. Pricing changes due to many factors including season – summer or winter, natural disasters, heat waves, cold snaps and other government changes in policy or legislation.
In a volatile market when securing a contract, pricing can shift drastically from one week to the next. Using a specialist who observes the price fluctuations daily can save you thousands of dollars over the term of your renewals.
If you are a business customer or body corporate that spends more than $1300 per month (rule of thumb) on your electricity account, you may be eligible to negotiate a Contestable Market Contract and the savings could be quite significant. If you are already on a contract the time to act is now. We are seeing savings of 8% to 52% off the bottom line. This is when the market is in its low.
How can the Contestable Market be low when the Tariff market is increasing? Simple answer, they are two different markets with different pricing rules. The Tariff Market is regulated pricing set by the competition authority in most states and they decide the increase in price. The Contestable Market customers negotiate their contracts at a time in the market when it has its highs or lows, like investing your money in the bank or creating a share portfolio.
So, what are your options if you spend a lot on electricity each month?
Do nothing and accept the increases but don’t complain later.
If you are a smaller customer on a tariff check, make sure you are on the correct tariff and request a discount from your retailer for a contract term.
Check your bill and if it is over $1300 a month engage a professional and reputable consultant to investigate if you are eligible for a Contestable Market Contract.
If you are in a contract, look at forward dating this to lock in rates.
Going from a tariff rate to a market contract is not a bad thing, and there are good savings to be made if executed correctly. Seek appropriate advice is essential as it is a big commitment and for Bodies Corporate the decision-making process must fit in with the good buying cycles. Going to a market contract you can make significant savings and minimise the increases you would otherwise pay if you remained on standard tariff pricing. This is because you can lock in peak and off-peak electricity prices under the contract, in which case the only increases are the regulated increases in the network and market charges. It is all about understanding the best month for your business to secure this contract.
Contact Watt Utilities today to discuss your options.