Power Up Your Savings: Uncover The Costs of Business Energy Bills
Saving energy costs in your business will reduce your operating costs and your impact on the environment. Electricity and energy are essential to modern life, powering industries and workspaces. As a business owner, you’re always on the look-out for ways to save money and grow your venture. When you operate a business, it is advisable to understand your energy use and take steps to become more energy efficient. In fact, many businesses include energy efficiency and conservation as a part of their business planning. Companies can take low-cost steps to start saving energy now, as well as more detailed actions that can happen over time. Learning how the energy market works is one significant way to start. This post will explore the main costs behind your electricity bill and discuss ways to help you save money.
Knowing what energy plan to choose when you are a business is also necessary. Consider a few factors when deciding on an energy plan.
Electricity rate comparison is one of the first things to do when you are looking to save money on your bills. Different energy providers charge different rates for energy, so shopping around is essential to finding the best deal. Try online comparison websites—they will help you get the best value for your money. You’ll need information about your current electricity usage to compare electricity rates. When comparing electricity rates, consider not only the cost per kilowatt-hour but also any additional fees or charges. Some providers, for example, may offer a low rate but will charge high fees for late payments or early contract termination.
You may want to do a gas and electric compare in addition to other energy rates. Many companies provide bundled plans that include both gas and electricity. You can save money on your overall energy costs by bundling your gas and electricity.
Another major aspect of taking control of your finances with regard to energy expenditure is knowing where we spend and how much. Many of us may not fully understand what goes into our electricity bills and the costs of generating electricity.
Have you ever wondered how your energy provider determines your power bill? Like any other business, energy companies pass on their costs to their customers. Hence you must understand how your business is being billed regarding energy usage. Understanding your electric bill is a good place to start. However, four major costs to energy providers are passed on to users and are not listed on your electricity bill: wholesale, retail, network, and government costs. Let us take a look at them.
1. Wholesale costs
Most of us buy our goods from retail stores, which buy goods from wholesalers. Well, energy works the same way—you buy your power from an energy retailer, which buys its power from wholesalers which generate electricity. The National Electricity Market (NEM) provides power to the vast majority of Australians. On the NEM, the price of electricity changes every 5 minutes—literally. Generators announce how much electricity they are willing to sell and at what price every five minutes. The Australian Energy Market Operator (AEMO) accepts these bids, beginning with the lowest-priced offer and working its way up until sufficient electricity supply is available.
The dispatch price for all electricity sold in the five-minute interval is then set at the highest offer accepted by AEMO, and the market price is determined by averaging the previous six dispatch prices. The price is primarily decided by the supply and demand at any given time.
2. Network costs
It is one thing to generate energy; it is quite another to get that energy to you. Because power plants are typically located a long distance away from places they power, network costs are the costs of transporting electricity to homes and businesses. This includes the cost of operating utility poles and power lines and the cost of constructing and maintaining them. The network infrastructure must be able to meet demand at its peak, which is typically less than 100 hours per year. While it may appear unnecessary to build infrastructure with such a short time frame in mind, the alternative is that the network could simply not handle these usage spikes when they occur.
Distributors incur network costs, which they pass on to your energy retailer, that then passes them on to you. Because different distributors service different areas, these costs may differ from one network to the next. Network costs account for the majority of consumers’ energy bills, accounting for 49% of the bill in some places.
3. Retail costs
When you think about your energy bill, you might not consider the time and money your energy company spends on things like answering phone calls, managing customer accounts, or even sending out your bill in the first place – but these are all factors that all included in your power bill.
Retail costs are incurred by your energy provider in providing retail and customer service. Most retailers will try to keep these costs to a minimum; in 2019-20, they accounted for only 6% of the total electricity price paid by most residential customers.
4. Environmental costs
Regulations imposed by federal and state governments can also increase the costs of your energy bill. The contribution of your energy retailer to mandatory government environmental schemes, such as renewable energy targets, is classified as a government cost. These costs account for approximately 7% of the consumer’s bill.
5. Renewable energy costs
If you have enrolled in a renewable energy program, your bill might also carry a fee to support the development of renewable energy sources.
Other things to think about
Along with these tips, you can also work on more minor things to help save money for your business in the long run. Using energy-efficient appliances and switching to energy-efficient lighting will help save those extra dollars.
It pays to regularly maintain your HVAC system. Doing so can help it run more efficiently and help you with savings.