Understanding your business energy bill is crucial to staying on top of your expenses and knowing how your usage is impacting your cash flow and profitability.
This article walks through some of the things to look out for in your commercial energy bill, with expert tips from Anthony Cooper, Senior Manager Energy Efficiency at Business Australia’s Business Energy Advice Program (beap).
What should you look out for on your energy bill?
With so much jargon and information on the average business energy bill, it can be tricky to know where to look. Getting to know the basics is the first step to avoiding bill shock, according to Cooper.
“Start by familiarising yourself with your energy bill,” he says. “In so many cases, the bills go straight to Accounts, and no one is really looking at it. That’s what leads to bill shock. If you aren’t religiously doing a price check every 12 months, chances are you’re paying too much.”
In Australia, there are multiple energy retailers who all format their bills slightly differently. However, there are some essential things to look out for on every bill.
Understanding your energy usage and breakdown
Your usage summary is a good indicator of how your energy usage changes each month. It can help you gauge whether it has gone up or down over the past year and whether you can expect seasonal spikes in energy costs.
“Looking at your usage summary can tell you whether your usage is just a ‘cost of doing business’ or significantly impacting your profitability,” Cooper says.
Your meter read details
On your bill, you’ll see one of two descriptions for your meter reading:
Actual: this means a meter reader has done a reading on the meter at your business premises.
Estimate: this means your bill has been calculated based on estimated usage for the billing
If an estimate ends up being less than your actual usage, you’ll need to pay the gap the next time your energy retailer does an actual read. However, if an estimate is higher than your actual usage, you should be refunded the difference on your next bill after an actual meter read is done.
Where possible, every bill should be calculated based on an actual read because it ensures what you’re paying is accurate.
“By law, energy retailers must do a meter read every year,” Cooper says. “But if your meter sits inside a locked box or a gate, it can make access difficult. What you can do is check with your energy retailer to see if you can supply a read yourself.”
Your tariffs/consumption charges
A tariff is a way you get charged for your energy usage. There are two main tariffs to be aware of.
Single rate/flat rate: With this type of tariff, you pay a fixed rate for energy, no matter when you use it. For example, it could cost you 22 cents to buy 1 kilowatt-hour (kWh) of electricity from the grid, whether you use it at 4am, 11am or 6pm.
Time of use/flexible rate: Here, the rate you pay for energy varies depending on when you use it. For example, your rates might be split:
Peak rate of 38c/kWh between 2pm to 8pm on weekdays.
Off-peak rate of 10c/kWh between 9pm to 7am on weekdays and all day on weekends.
Shoulder rate of 18c/kWh between 7am to 2pm and 8pm to10pm on weekdays.
Peak, off-peak and shoulder periods can vary between energy providers. To be charged a time of use rate, you usually need to have a digital smart meter installed instead of a traditional analogue reader.
Cooper says deciding between single rate or time of use pricing depends on your business and when you use the most energy.
“If you’re a baker who opens at 4am then most of your usage may happen off-peak, so you could save by moving to time of use. Whereas if you own a pub and your busy time runs through the peak period, moving to time of use pricing could be detrimental. So, it all depends on what’s known as your ‘load profile’ – when you use energy.”
Could you be saving on your business energy bills?
Aside from reviewing your usage, meter read details and tariff, there are lots of ways to reduce your consumption and cut down on energy costs. If you’re looking to have your energy bill explained or for ways to reduce expenses, Cooper says a free energy audit from beap is a great place to start.
“We’re a federally funded free service – so we help small business owners shop better when it comes to energy retailers, and to identify energy efficiency opportunities.”
Get started with a free energy consultation today.