Leading Edge is in the process of preparing a series of group energy supply tenders for hotels and pubs in New South Wales, Queensland, Victoria and South Australia. We have been promoting this service by telephone, fax and in PubTIC (industry magazine).
Because we know that information and being kept up-to-date is important, we bring you this update on what we are doing and we aim to answer a few common questions:
What is the objective?
Our goal is to minimise some of the fixed and variable charges that are included standard commercial & industrial (C&I) electricity bills. The plan is ambitious, given the complexity of the commercial & industrial electricity market. We do not expect to be able to offset recent market-driven price increases, but we do aim to reduce them where possible.
What charges are we targeting?
The areas of the bill that we are targeting include:
- Retail service fees – through group bargaining with energy retailers.
- Metering charges – through group bargaining with metering providers.
- Energy usage charges – through highly discounted broker commission.
- Network tariff allocation – individual assessment by Leading Edge experts.
The tender process is free of charge and obligation-free.
Who can participate in the group tenders?
This group tenders campaign is focused on commercial and industrial (C&I) electricity customers. A commercial and industrial energy customer is considered to be a high volume energy user and is subject to more burdensome and less flexible supply contracts. These contracts make assembling a group of sites with sufficient scale more complicated because contract terms are generally 2-3 years in length and cannot be terminated immediately in order to take up alternative agreements.
The programs are not targeting SME or residential customers, but we are still providing SME customers with competitive offer comparisons if they apply.
What is our approach?
Our strategy is to get as many entities on board as we can so we can then classify them into tender groups based on the next contract start. Once we have a reasonable number of sites in a group, we then prepare to take that group to tender. We will advise the group members as and when we do this.
Will this tender result in a standard rate card?
No, it won’t. Each tender participant will likely receive a different offer when compared to other participants. Why? Because we want to avoid creating a subsidy system where some participants pay more so others pay less. To achieve a standard offer across the group, an imbalanced situation would be created where some tender participants would benefit at the expense of others. This is because C&I electricity offer pricing is complex, changes daily, and depends on wholesale market movements. Energy retailers will also price such factors as contract start date, load profile and credit risk into their pricing which will vary for each tender participant.
What if my contract is up for renewal soon?
If you have registered your business for the tender but your current contract expires within the next 3-6 months, then we will aim to tender your contract individually ASAP. We will then provide you with an offer which reflects current market rates for your consideration.
Why not wait for the tender?
Given recent, wholesale market volatility we believe that it is in your best interest to consider accepting an offer ASAP to avoid further short-term rate increases.
Will the group tender offset recent price increases?
No, most likely it will not. While our tender process aims to secure the best possible outcome for tender participants, wholesale market forces in the current environment are far stronger than the leverage that any group tender could possibly exert. In other words: Market timing is a far more powerful energy cost driver than the bargaining power of a group tender.
My contract isn’t up for renewal. What can I do?
We don’t expect wholesale energy rates to turn around anytime soon. Leading Edge is now offering Solar Tenders and Energy Efficiency Solutions. We will audit your energy use and find the best plan for you. We will also help you identify and eliminate waste to maximise the use of your energy consumption.
Would you like to better understand the group tenders programme or learn more about your energy cost-reduction options? Call us on now on 1300 852 770 for a free initial assessment by our team of experts.