If you’re a commercial or industrial business, chances are electricity is one of your largest operating expenses. But, it’s probably an expense you don’t pay much attention to. Electricity bills arrive in your letterbox each quarter like clockwork, never missing a rotation. You open it, check it, pay it, file it. When you notice a jump in price, you usually write it off as the result of inflation-inspired price increases we’ve all grown used to.
But, have you ever taken a moment to audit your energy use? What if you’re paying too much? We’re going to explain how energy pricing tariffs work and how you can check if you’re paying too much.
How Energex’s New Demand Tariff Structures Work.
There’s new tariff pricing taking effect from 1 July 2017. It’s kind-of-a-big-deal for those businesses who have been placed on the default small demand tariff.
Small Demand customers are paying the highest demand rates in the Industry
Demand tariffs have moved from a kilowatt (kW) demand to a kilovolt Amp (kVA) demand. If you’re using more than 100,000 kWhs annually, then you’re being charged a kVA demand charge for your highest peak usage each month (over a 30-minute period (i.e. 110-kVA )
How Demand Tariffs Affect Your Business.
Many business customers are paying too much for their energy use because they aren’t assigned to the most appropriate tariff to suit their consumption needs. These small demand customers are paying the highest pricing for network costs which can be over 50 per cent of their electricity bill.
It makes sense to do an audit to find out which tariff you’re on and if you’re able to be reassigned. There are several strategies you can implement in your business to reduce your annual energy usage below 100,000 kWhs and allow you to be reassigned to a better tariff. In doing so, you’ll reduce your energy bill by up to 50 per cent. Apply for a Free Energy Bill Audit
How To Make Sure You’re On The Right Demand Tariff.
Check your electricity bill and locate the network charge line items
If you’re a small demand structure customer, you’ll see something like this:
- Volume Charge 1.411 c/kWh
- Demand 19.979 $/kVA
- Service Availability Charge 4.753 $/Day
This indicates your network tariff consists of a volume, service charge, and demand charge, when it might not need to.
Calculate your consumption
Calculate your total peak and off-peak kilowatt hour consumption for the monthly billing period and multiply it by 12 (or by 4 if you’re using a quarterly bill). This gives you an indication of your annual kWh consumption and shows you how much over the 100,000 kWh threshold your business is likely to consume.
Manage your energy demand
If you’re spending between $30,000 and $100,000 on electricity each year, then you’re likely paying a demand component on your bill. The good news is, there are some strategies you can implement that will save you money over time.
- You can manage your peak demand cost by measuring your power factor efficiency during your highest peak usage each month. The closer your power factor is to 100% the less you’ll be charged. You can install capacitors into your electrical boards that will reduce your reactive power.
- Reduce your energy consumption by installing renewable energy sources, like solar power, to off-set your grid electricity.
Demand management allows customers to mitigate costly network charges and reduce their impact on future growth of the electricity grid infrastructure. Once you’re reduced your consumption under 100,000 kWhs you can request to have your tariff reassigned to Business Flat.
If you’d like to learn more about tariff assignment and demand management, download our detailed 5-Step Guide to Halving Your Business Energy Costs.
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