Energy prices in Australia continue to climb. A recent report from the Grattan Institute highlights that between 2015 and 2017, National Electricity Market (NEM) wholesale prices went up by an astonishing 130 per cent. Over that same period, the amount wholesalers would pay for power rose from $8 million to $18 million.
All of which is to say something you likely already know: your power prices have gone up over time. In 2017 alone, Grattan reports the increase was 20 per cent. At Civium, we want to make sure you get a fair deal on your power, no matter what the market conditions. That’s why we recently branched out and engaged Strata Energy Services to help achieve this.
Bringing power prices down in Australian strata
Energy passes from wholesaler to retailer, and from then to the end user. As your strata manager, Civium engages a retailer to provide power to an entire building. But as prices have increased, we felt it important to address those costs and get a better deal for you.
Strata Energy Services (SES) are a broker, a mediator between end users (or strata managers) and Australia’s electricity retailers. We did our due diligence on them, communicated exactly what we wanted to do (get a great deal on power for our residents) and when we needed it.
From there, SES went to a competitive tender. This currently sits with at least seven different retailers, and we’ll make a decision alongside SES on the best electricity solution for everyone.
Why take strata power to tender?
It’s fair to say that every electricity retailer in Australia has felt the pressure of increasing wholesale prices. As such, it’s next-to-impossible to get power at prices similar to what they were three years ago. But by opening up the opportunity to sell power services to Civium across the market, we introduce a level of competition that facilitates a good deal.
Rather than stick with the same provider and assume prices were the same everywhere, we wanted to push retailers to offer a better deal than what they perceive others to be delivering in the tender process. When the tender is complete, we’re hoping to deliver some excellent electricity savings to you.
What makes a fantastic energy retailer?
Power prices have two primary components: consumption (the power you use as a strata collective), and network/environment charges – often known as poles and wires costs. The consumer market tends to focus on consumption costs, but it was critical that we sought out fair pricing on these network charges, as well as the billing method itself. That’s why we took a holistic approach to the tender process, and (in consultation with SES) searched for a retailer that would deliver on the following fronts.
Perhaps the most important immediate factor for you – we need an energy retailer with competitive pricing on energy usage. The Australian Energy Regulator (AER) explains that this is a variable cost, depending on usage over the billing period. It may also sometimes exclude devices that have separate billing, like slab heating or storage systems for hot water. This cost will also fluctuate depending on when the energy is used (during peak or off-peak hours).
Network (poles and wires)
This should be a fixed cost, which the AER notes will often read as a daily supply charge or a service to property charge. Typically, this cost is fixed and tethered to the infrastructure the retailer uses to deliver your power.
We felt it important to understand exactly what you are paying for. That’s why we asked SES to measure power providers on billing transparency – how much detail they include on where strata owners incur costs, how much is for usage vs consumption, as well as how much is other fees and charges.
That way, you (and we) can be certain about where your money is going.
Savings (initial and ongoing)
A contract to provide energy does not have to be a static agreement. Over time, we want to be able to realise further savings that can be passed on to you. In this way, the tender process took into account the long-term savings involved in an energy contract – not just the reduced costs from the outset.
Oftentimes, energy bills will be estimates that are balanced out with hard readings every few months. However, it’s important that the billing is always in line (or as close to this as possible) with the actual network and consumption charges. To implement this, the tender process incorporated an element of bill validation over time.
We’re hoping this means the end of surprise billing and inflated costs. No more wild estimates, just the costs you actually incurred.
Flexibility of roll-out
We don’t want to introduce a new energy retailer and then have a rough transition period, during which you lose power or have inconsistent billing. Retailers must be able to deliver flexibility in the rollout of their service.
Extra fees and charges
The AER notes that retailers can include a number of extra costs in their billing. Connection setup, termination (early or on time), payment processing, late or missed payment, disconnection or reconnection, and special meter readings can all result in higher costs to strata owners. We sought a retailer who would deliver great results with minimal fees.
On top of all this, we asked SES to determine the cost of each retailer in dollar terms. Many organisations will look at the percentages and deem this sufficient, or largely focus on the usage billing. By taking a holistic whole-of-building approach to energy pricing, we hope the tender process delivers a service that improves your lives in every possible way.
Civium and SES: Delivering results for your strata
Generally speaking, the strata management industry has been slow to realise the power of systems like SES’ energy broker initiative. By bringing SES into the fold, we are able to use market competition to bring you a better deal that may have been possible by simply making do with what we have.
The end result for strata owners, hopefully, will be clear: transparent billing, initial and ongoing cost savings, as well as fewer one-off fees for things like reconnection or special reads.
Given current market conditions, it’s important to have someone in your corner. The Grattan Institute notes that as coal-fired power stations close down and a concentration of retailers induces artificial scarcity, prices are unlikely to ever return to those $50 megawatt-hour levels. But with Strata Energy Services, we’re hoping to at least bring some relief to your bottom line.
We think we’re one of the first in the ACT to start working with energy brokers and expect many more to do the same in the coming years. With the pilot in ACT complete, we intend to roll out similar processes for our NSW, Queensland and Victoria clients in the next six months.
If you want to find out more about what we’re doing or how the energy broker initiative works, make sure to get in touch with our team.