Are You Overpaying for Energy?

Energy costs in Australia have risen steadily over the past decade, putting pressure on strata managers and committees to minimise expenses for owners.

The reasons behind rising energy prices are complex, with the state you live in, and which part of the state, impacting on what you pay for supply. Importantly, the time of the year you contract your electricity or gas, can also have a big impact on the price you might be paying for the next 1-3 years.

The energy market is notoriously complicated, and without expertise, it’s easy to overpay. There can also be a lot of confusion when it comes to receiving offers from Energy Retailers. Is the meter point you are buying at small market or large market for example?

• If you are on a Large Market contract, have you been setup on the right network tariff? Network tariffs are set by your network provider annually e.g. Ausgrid, Endeavour, Citi Power etc. Being on the incorrect network tariff, could see you paying more than you should.
• Are there any hidden costs in your small market contract? i.e. paper bill, payment processing fees that quite often are hidden in the contract terms.

Active can remove this confusion for you and help you focus on how to manage these costs effectively.

Many strata managers and committees rely on energy brokers to manage electricity and gas contracts for their strata plans. This approach can bridge the knowledge gap, but it’s important to navigate potential pitfalls. Below are key tips for ensuring your energy brokering or tender process delivers real value.

Ensuring your owners aren’t overpaying

1. Timing is critical

Energy prices fluctuate throughout the year due to factors like temperature, demand, and supply outages.

• To maximise cost efficiency, avoid taking your strata plan to market during periods of high demand. Instead, consider forward contracting. This allows you to lock in favourable pricing at an optimal time of the year, even if your current contract still has months remaining. The new contract will only take effect after the existing one expires, ensuring you secure better pricing without rushing decisions at the last minute.
• Ensure you provide your broker with ample lead time to evaluate and secure the best deals before your current contracts expire. Limited time to negotiate a new contract can leave you vulnerable to high-pricing events. For example, even a one-day outage at a generation facility can cause a ripple effect of elevated prices, which may take time to stabilise. Planning ahead helps mitigate these risks and ensures more favourable pricing outcomes

2. Insist on multiple quotes

A thorough tender process should present multiple pricing options with transparency.

• Ensure the broker discloses which retailers were offered the tender and, of those, which retailers provided quotes and what were their respective offers.
• Some brokers are owned by energy retailers with potential conflicts of interest. While this isn’t necessarily a problem, it’s crucial to confirm the broker isn’t prioritising their parent company over a better deal. Your broker should always be putting forward the best plan for the community.
• Brokers earn commission on contracts. Confirm that the recommended deal serves the strata plan’s interests, not just the brokers.

3. Market insights are essential

Your broker should provide guidance on market trends, such as projected energy price movements.

• Avoid locking into long-term contracts if prices are expected to drop significantly in the next 2-3 years.
• Ensure your broker is conducting network reviews as part of the brokering process for large market contracts, they should ensure you are on the best network tariff for that metering point.
• Balance contract length with pricing stability to avoid missing future savings opportunities.

4. Streamline contract approvals

Energy offers often have short expiry dates due to wholesale market fluctuations. Avoid missing out on competitive pricing.

• Arrange pre-approval from the committee to execute supply agreements within defined parameters.
• Establish guidelines based on current contract rates, allowing for minor flexibility to lock in deals without additional delays.

Why this matters

Energy brokering can save time, address knowledge gaps, and secure the best deals for your strata plans. To maximise these benefits, it’s essential to make the right choice, ensuring transparency and fairness while keeping the best interests of your owners as the top priority.

Following these steps strata managers and committees can make informed decisions that optimise energy costs for owners while ensuring regulatory and governance standards.

At Active Utilities, we connect communities, creating buildings that are liveable, active, and where the foundations are in place for strong and thriving communities. We bring life to apartments, workplaces, and retail centres, and help to build energised places where people live, work, and socialise.

Contact us at sales@activeutilities.com.au for more.