How to choose the right energy consultant
Energy Action highlights ways to choose the right energy procurement partner.
With the cost of energy steadily increasing and the introduction of the carbon tax, it is more important than ever to make sure that you are getting the best price for energy for your facility that you can. Many businesses are turning to procurement partners to help them choose the best energy supplier for their needs. A reputable energy consultant can help secure a suitable contract, but it can be difficult to know who to select. When choosing an energy consultant we advise that you:
1. Choose a partner that is transparent and provides comparative quotes
Go for a partner that is transparent and willing to give you all the information you need to make an informed decision regarding your needs (some consultants only provide you with their top recommendations). The lowest price does not necessarily equate to the best option, as there are many other factors to consider, such as environmental charges, network tariff optimisation, operational charges and contract duration.
2. Go for a clear commission structure and establish who pays
Understand your costs upfront. Ensure that the partner you choose receives the same commission from all energy providers – this ensures there is no favouritism. Also, choose a partner that does not charge multiple stakeholders for the procurement initiative (some consultants may charge a percentage commission to the retailer and then also to you for a nominated percentage of your savings secured). In some cases the retailer pays the commission for the ‘signed, sealed and delivered’ business, or you may be required to pay the consultant directly.
3. Don’t select a partner that has quotas to fill with providers
If a company has quotas to fill with providers, it may be difficult to remain unbiased. Choose an independent partner to ensure unbiased advice. Often a consultant who only provides one option (the ‘best option’) could be trying to fill a quota.
4. Ensure your partner is licensed to provide advice
Ensure you are dealing with an energy management company that holds an Australian Financial Services License (AFSL) – particularly when looking at forecasted prices and future contracts. With an AFSL, companies are licensed to provide financial advice in relation to the wholesale electricity market, which ultimately impacts retail pricing. This license requires the broker to have an in-depth understanding of the National Electricity Market and financial products. Certified brokers regularly undergo market training and must act in accordance with ASIC regulations, maintaining the highest levels of compliance.
5. Choose a partner that looks at the whole picture
Don’t choose an energy consultant who only looks at energy rates and fails to consider other factors. These other factors may include being on an unfavourable network tariff, which can dramatically affect costs. Choose a provider that looks at the bigger picture on your behalf – after all, as energy experts, they should be able to identify saving opportunities for your business outside contestable contract options.
6. Make sure your partner can tailor their services to your business needs
Many competitive retailers are willing to provide a price based on business-specific energy requirements – especially since deregulation. An experienced broker or energy management company can develop a customised specification for a business’ energy profile and advise a suitable time to take your contract to market. They will then review and analyse the various offers, giving all the information necessary to make an informed decision.
7. Make sure the carbon tax is included in their negotiations
Some retail electricity contracts do not factor in the cost of carbon – instead, they contain clauses that allow for an adjustment to be made when the carbon price is introduced (note: the carbon tax was introduced on July 1). Insist on a carbon inclusive contract to avoid unexpected increases in cost due to carbon prices.