Note: The advice in this article is written with Australian readers in mind, but some tips are still universally relevant.
When you’re running any small business, reducing your costs without sacrificing quality is a constant goal. Small field service businesses face slightly different challenges to other small businesses as field service employees are always on the road or on-site and not spending time in stuffy offices, warehouses or back rooms. While cost is the main reason you might want to reduce your energy costs, it is not the only reason.
The first step to reducing your energy costs is to know what your energy contract is. There are three types of energy contracts. The first is a “market retail contract” or “market retail offer”. Energy prices in an MRC are chosen by your retailer and can change at any time (meaning 30 seconds after you sign up the price can increase or decrease without you being informed). When the price changes the retailer has to tell you before your next bill arrives. Prices can change up or down, meaning you can get discounts as well as price hikes. If you check with your retailer, they may offer contracts that fix the price for a certain period. Look for phrases like “fixed price”, “price guarantee” and “price freeze”. MRCs are mainly intended for low energy users, so if you’re running your business from home an MRC may be advisable.
The second type of contract is a “standard retail contract” or “standing offer”. Prices in SRCs can’t change more than once every six months and so don’t have the opportunity for discounts like MRCs, but retailers have to be more active in making sure you know about when prices do change and there is set amount of time before they can cut you off when you can’t pay. Finally, standard retail contract prices are set by the retailer or the government, depending on where you live and are generally higher than prices in market retail offers. SRCs are targeted at businesses that want a fixed rate to rely on when calculating profit margins and have a lower level of energy usage as well as residences that want a fixed price for their usage.
The last type of contract is a negotiated market contract. If you have high energy usage, perhaps due to an aspect of your business, you can negotiate with your retailer for a specified contract. negotiated contracts are based on market prices like market retail contracts, so you can still be at risk of price fluctuations, however they allow for all sections of a contract to be modified and other services included that may not be available otherwise. NMCs are generally the best option only when you have a good understanding of what your energy needs are and when you methodically keep track of your usage. Alternatively, you can hire a third party that can negotiate for you
If you’re unsure which contract you are currently on, expect an SRC if you have never signed an MRC or haven’t moved for several years. Consider the pros and cons of each of these contracts and determine which fits your business needs.
What experiences have you had with energy retailers when looking at contracts? Let us know if the comments below or email us at email@example.com.
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