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Energy Data – Smoke and mirrors for the average Business owner

Problem is that energy retailers know how to analyse the data, and in most cases, their customers don’t. So, the energy retailers will continue to make as much money as they can, legitimately and legally, from every customer who doesn’t know how to analyse the data!

Today, everything starts and ends with data. Technology can’t work without data; every app you’ve downloaded to your phone uses data, and we’re constantly reminded of how companies use data to track our movements. Data is everywhere, including the way your energy bill is created.

Meters, meters, everywhere

Every business is tied to a meter. The premises you own, or rent, are irrevocably tied to a meter installed by a company whose sole purpose is to install meters. It’s not surprising that they make good money from it.

Then the energy retailers control the meter once you sign their contract to supply you with energy.

That meter spews out data at a rate you wouldn’t believe. Look at a past bill, you’ll see daily supply charges, general usage rates and tariffs. You could be on a single flat general usage rate, a time-of-usage rate, or a multi-flat or block-usage rate.

Never mind what any of that means, what it means is data. You might also see on that bill a demand tariff, an additional fee based on the highest peak in your energy usage for the month. More data.

Is your Bill correct?

I’m sure your eyes are starting to glaze over. And all these bills, regardless of the retailer, are essentially the same; every electricity bill you’ll ever see is basically the same from one company to the next.

Different logos at the top of the page, different layouts, but the figure you’re scanning the page for, the number at the bottom of the page, that figure that is going to make as deep a hole in your bank account as possible, will do just that unless you understand the data.

And the electricity and energy retailers know it and capitalise on it.

Energy Data – Insights to get a fair deal for your Business

On the other hand, analyse the data to your advantage and save a serious part of that $15,000, maybe up to $30,000, that most cafes pay in energy bills yearly. Or you could be turning a significant slab of those expense dollars into a greater return for your business by increased efficiencies and reduced time wasting.

Let’s start by being big-hearted and accepting that the bill you’ve got in your hands is correct.

Unfortunately, you read that right, errors are made where the bill you receive is higher than it should be, and very rarely are you on the receiving end of a lesser charge. But how do you tell whether it’s correct or not? You could start by comparing like with like. Say two similar size cafes, where one power bill is just on the edge of the $15k, the other is greater by $4,000. How and why?

Apples and Oranges….and lemons and Limes

Different providers? Possibly? Different trading hours? Pretty easy to check. Maybe the difference is in the efficiency of one café’s cool room, maybe one makes larger breakfasts and uses more power for cooking? Again, pretty easy to check.

We once compared a chain of gyms, eight to be precise, like for like we thought, and what we found surprised the owner of the business and us. One gym’s power bill was substantially higher than the others, way more than the next closest. Why? The opening hours were the same for all eight. Lighting is almost exactly the same in each gym. Terminals and computer usage were slightly variable depending on member numbers, but even that analysis showed us that the member variation was minimal.

Turned out the problem was picked up in the data. Not a fault, not a discrepancy just a small café in the corner of one of the gyms, separately owned and operated, was living off the fat of the land, courtesy of the gym owner who thought the café didn’t use much power at all. Little did he realise it was eating into his profits.

This kind of like-for-like comparison gives us a start, with every likelihood of a significant saving already identified through the data. Digging deeper could open up a whole new world of savings and efficiencies.

Energy Categories impact your bottom line. This is what you need to know.

Most businesses are not aware that the energy market pigeonholes them into one of a small number of categories. In Southeast Queensland, you’ll be recognised as an SME, Small Medium Enterprise, or a Large Energy Market Customer with a Commercial Electricity Contract, or C&I.

You’re graded into one or the other depending on whether you use more or less than 100,000 kWh of electricity per annum. The difference between the two categories in terms of cost is staggering, and not as you might think, to the advantage of the larger consumer.

In the current market, C&I customers are paying significantly higher rates for their energy consumption than SMEs. However, 12 months ago, this was reversed, without a lot of fanfare and with many businesses unaware that the change had occurred. What makes this particularly alarming is that many businesses who are close to the tipping point, that point where their consumption of electricity moves from below to above 100,000 kWh, may not even know that their energy costs are just about to go through the roof.

If you understand the data, there are things you can do about it. If you don’t, you will be reclassified as C&I with a commercial contract at higher rates.

Let’s say your kWh usage is currently sitting in the 90,000’s and you want to expand your business. Chances are that expansion could push you over the edge into C&I. But there are things you can do to reduce your usage, and the detail is hiding in plain sight in the data.

Not long ago we encountered a similar problem when Phil Di Bella at the Coffee Commune engaged us to review an unexpected hike in their energy costs. The Coffee Commune had unknowingly tripped the threshold and had to be moved onto a commercial contract. No warning, at least none that a customer would have been expected to understand. We resolved the issue by negotiating a short term stay on the increase and then identifying a number of opportunities to reduce the usage and got them back to under the threshold.

It’s never too late for any business to assess their energy position. You can start by reviewing your efficiency in energy usage, where are the highs and lows in your consumption, and what can you do about them? You could consider solar, or what’s known in the industry as “power factor correction”, maybe “voltage optimisation’ or you could assess how you manage demand. One, or a combination of these data points, with the correct analysis, could keep you under that 100,000 kWh for a significant period of time, more than enough to factor in the expansion and the necessary consolidation strategies you’ve considered. Even if you’re not at that tipping point, like everything, knowledge is power, and the correct interpretation of the data could significantly affect your next power bill.

Win the Battle

Sadly 98% of business owners tell us they don’t understand the charges on that bill. This is not a reflection of their intelligence but a reflection on the unnecessarily complicated energy market, and to be cynical, a preference on the part of the industry to keep it that way.

Understand the data properly and you will make savings, potentially substantial savings. Talk to Sharon, as your energy consultant or broker, someone you can trust and who will work for you, not the provider.

It’s about finding the right person to help you navigate the complexities to make informed, data-driven decisions that will put a permanent smile on your bank manager’s face.