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Advice for your business

How to secure the best energy retail contract

With dozens of energy retailers in Victoria, the best deal will depend on the size of your business. Cafés and shops are best served by residential retailing options. Larger businesses have more opportunities, but it can get tricky.

Smaller businesses

The state-mandated Victorian Default Offer (VDO) requires all retailers to comply with pricing tariff ceilings published each year, for a fair electricity deal.

The VDO is called a standing offer, however, you may be presented with a market offer, a discount on the reference price under certain conditions. Be sure you fully understand these conditions.

There may also be higher market offers including the government-sponsored Greenpower™, and retailer plans with up to 100% renewable energy. The latter generally has the retailer source directly from remote solar and wind power plants for a larger groups of consumers.

To find out more about retailer plans, hop onto the Victorian energy retailers website and browse the many retailers’ offers

Larger businesses

If your monthly energy bill shows a consumption in the tens of Mega-Watt-hours (MWh), you are in a good position to negotiate a customised energy contract. These contracts can give you direct access to generators and to the electricity wholesale market, the National Electricity Market (NEM).

Fixed term contracts allow you to hedge against the fluctuating spot market by locking in a price for a 2 to 5 year term or even longer. You can also include options to trade on the NEM, depending on your risk appetite.

An increasingly attractive option is to buy electricity directly from a renewable energy generator under a retail Power Purchase Agreement (PPA). Retailers can now aggregate a number of their customers under a single PPA and offer low prices with terms of 5 to 10 years.

The retailer will consider your load profile, and you may decide to time shift the use of some equipment to take advantage of lower prices. The mechanism of Demand Response allows you to earn an income by load shedding at key moments of very high demand.

There are many parameters to your optimal energy equation, so if you are feeling out of your depth, it is a good idea to engage an energy broker. Their expertise will help you tailor a contract to your specific needs and objectives.