$120,000 annual savings for Blue Gums Hotel & The Somerset Hotel through forward purchasing, network tariff optimisation & blend and extend

BG Leasehold received quite the bill shock when acquiring two hotels in South Australia as they were bundled into the sale price of the properties. 

With some careful energy market research, Energy Management Consultant Madonna Ghajar was able to engineer almost $120,000 in savings on their electricity spend. 

The situation

Blue Gums Hotel & The Somerset Hotel were on a three-year contract with the outgoing company. The electricity contracts were included in the sale of the properties, so the new buyers didn’t have an option. 

What we did

Leading Edge Energy’s Madonna Ghajar assisted with the novation process, and requested a blend and extend agreement with the current suppliers.

Blend and extend contracts are a great option for energy users to make immediate savings, even when locked into a contract. 

In a nutshell, when electricity prices fall below the current contracted price, a lower price can sometimes be negotiated by agreeing to an extended contract. The new lower price is ‘blended’ with the previous higher price to deliver savings from day one! 

In this scenario, this process for BG Leasehold resulted in a $46,000 saving.

Network tariffs can account for between 30 to 60 percent of an energy bill. By analysing consumption and demand data, Madonna identified a cheaper network tariff setup which resulted in a saving of $20,000 for each hotel.

Madonna also advised the owners about the benefits of forward purchasing of energy on the wholesale markets.

Using astute market timing, Madonna presented a deal to replace the incumbent one with a tender that will save $20,000 each on direct energy costs.

The same was then done with gas procurement resulting in another $12,000 saving.

Leading Edge Energy also drew up a rooftop solar feasibility study which the owners are evaluating in terms of savings and return on investment.

“We are thrilled with the savings Madonna was able to negotiate for us. She did the necessary research and legwork and has achieved an amazing result for our business. Thanks, Madonna!” – Sam Tomich – BG Leasehold Owner.

How much can your business save?

Wholesale electricity prices are still at remarkable lows, however volatile prices lie ahead as the grid converts to renewable energy.

If you would like regular market updates in order to keep track of the electricity prices so that you can purchase when prices are low, please subscribe here

Going to the market at the right time to purchase wholesale energy can result in big savings.

Get in touch on 1300-852-770 or email us at hello@leadingedgeenergy.com.au and let’s talk about how you can save on your commercial electricity costs.