Quick summary
Tendering your electricity and gas is a structured way to ask multiple retailers for comparable offers, then pick the best fit on total cost, risk, and contract terms. Done well, it reduces surprises like demand charges, pass-through fees, or mismatched start dates. This guide explains each step, what to ask for, what to compare, and includes a tender checklist and a simple tender diagram.
Key takeaways
- A commercial energy tender process is about making offers comparable, not just collecting prices.
- Electricity offers can look cheap but still be expensive if demand charges and peak-time rates do not match your usage.
- Gas offers often hinge on how your volumes swing between seasons and what is included in transport and other pass-through items.
- A good tender pack forces retailers to quote on the same term, start date, and pricing structure.
- The safest selection method is weighted scoring across price, risk, service, and contract terms, then validating the winner’s paperwork.
What is a commercial energy tender process?
A commercial energy tender process is a formal request for pricing and contract terms from multiple energy retailers, so you can choose electricity, gas, or both on a like-for-like basis. It is common for larger energy users, multi-site businesses, and any organisation that needs governance around buying decisions.
Tendering matters because energy bills are not one simple rate. A typical electricity bill includes a fixed daily supply charge and usage charges, and some tariffs also include a demand charge based on your highest 30-minute peak in a billing period, measured in kilowatts, which typically uses the highest 30-minute period for calculation.
When does an energy procurement tender make sense?
An energy procurement tender makes sense when your risk of choosing the wrong structure is bigger than the effort of running a process. That usually happens when your sites have smart meters, time-based pricing, demand charges, or meaningful seasonality in gas use.
It also makes sense when you need decision traceability. If you need to explain to a finance team, an owner, or a board why one offer won, a tender gives you a clear paper trail: scope, evaluation method, assumptions, and final contract checks.
What are you actually buying in a business energy tender?
You are buying a contract for energy supply and billing services, not the physical delivery network.
Electricity prices usually bundle several moving parts into a retail rate. Network tariffs are set by your local network and passed through by the retailer in different ways, and demand-based network tariffs commonly measure demand in 30-minute intervals and charge for both total usage and peak demand, which is the distance travelled versus fastest speed reached.
Gas prices vary by state and market arrangements. In parts of the east coast, short-term wholesale balancing and trading occurs through defined hubs, and a Short Term Trading Market (STTM) is a hub-based wholesale gas market that supports short-term trading. In Victoria, wholesale market arrangements differ, with the Declared Wholesale Gas Market (DWGM) operating as a wholesale market for injections and withdrawals on the Declared Transmission System.
What is the step-by-step commercial energy tender process?
A commercial energy tender process works best when it is run like a procurement project, not a price hunt. The point is to get comparable offers, choose based on total cost and risk, then implement cleanly so the first bill matches what you agreed.
Step 1: Define scope and objectives
Decide what you are actually trying to achieve before anyone quotes. That includes whether you are tendering electricity, gas, or both, which sites are in scope, and whether you prefer one retailer or will accept a split award. If you skip this step, retailers will quote on different assumptions and you will not be comparing like-for-like.
Step 2: Collect bills, interval data, and site details
Collect the minimum data pack so pricing is based on reality, not guesswork. For electricity, interval data matters because it shows when you use power, not just how much. That is what drives time-of-use outcomes and demand charges. For gas, you need your historical volumes and seasonality, because winter-heavy use can price differently to flat use.
Step 3: Set contract strategy and risk limits
This is where you choose what you will and will not accept, before pricing arrives. Examples include whether you want fixed rates, variable rates, or a mix, and whether you will accept broad “pass-through” clauses where costs can change outside your control. If you do not set risk rules early, the cheapest-looking offer can win on paper and lose in practice.
Step 4: Build the tender pack and pricing template
Your tender pack is the template retailers must follow. It should force consistency on term, start date, sites, inclusions, and pricing format. If one retailer quotes 24 months starting next month and another quotes 36 months starting after your current contract ends, you cannot fairly compare them, even if both look “cheap”.
Step 5: Issue the tender and manage clarifications
Issue the tender to a controlled list of retailers, set a questions deadline, then answer questions once in writing so everyone gets the same information. Retailers price uncertainty, so a messy process can lead to higher risk margins or fewer serious offers. The goal is to reduce ambiguity so the offers reflect your sites, not assumptions.
Step 6: Model and score electricity offers
Do not evaluate on headline rates. Evaluate on total modelled cost using your usage profile, plus the contract terms that create risk. For sites on demand pricing, the demand component can dominate cost if your peak periods are not managed. You also need to check whether the “peak window” and demand method in the offer aligns with how your site actually runs.
Step 7: Model and score gas offers
Gas needs its own checks. Confirm whether the unit rate includes all relevant components or whether items are billed separately, and confirm how seasonal swings are treated. If your volumes vary heavily across the year, a quote built on the wrong profile can look competitive and then underperform once bills track real usage.
Step 8: Validate the contract, implement, and check the first bills
Before signing, validate that the contract schedule matches the quote, every site and meter is listed correctly, the start date is achievable, and billing requirements are captured. After go-live, check the first bill against the agreed rates and structure. This is where you catch configuration errors early, before they repeat across multiple invoices.
What should you do before you go to market?
Start by defining your scope and constraints. This is where you decide whether you are tendering electricity only, gas only, or both, and whether you want one retailer for all sites or a split award.
You also need usable data. If you have smart meters, ask for interval data (half-hourly or better) so offers can be shaped to how you use energy, not just your annual total.
What should your tender pack include?
Your tender pack is the rulebook. If it is vague, offers will be vague and hard to compare.
Include:
- Site list with addresses and meter identifiers.
- Billing preference, including whether you want monthly billing and whether you need consolidated billing for multiple sites.
- Preferred start date, and whether a delayed start is required to match an existing contract end.
- Requested terms, such as 12, 24, and 36 months.
- Pricing structure you will accept, such as fixed, variable, or a mix.
- Clear instruction on what must be included versus passed through.
How do you run the tender and manage questions?
Set a clear timeline: questions due date, response date, and your decision date. Retailers price risk, so an organised process usually gets better engagement than an open-ended request.
If you use a representative, a Letter of Authority is commonly used so they can request usage and billing data from your current retailer.
How should you compare electricity offers?
Electricity offers are rarely comparable on a single cents-per-kilowatt-hour number.
Compare at least four layers:
- Supply charge: the fixed daily cost.
- Usage rates: what you pay per kilowatt hour, including any time-of-use periods.
- Demand charges: what you pay for your peak 30-minute demand if your tariff has demand pricing, which is commonly calculated using the highest 30-minute period.
- Fees and pass-throughs: metering, network changes, and any indexation clauses.
Then validate the comparison by modelling each offer against your historical interval data, not just annual totals.
How should you compare gas offers?
Gas offers often look simpler but still hide complexity in what is included.
Ask each retailer to state clearly what is included in the unit rate and what is passed through. If your gas use is seasonal, check whether pricing assumes a flat profile or allows for your winter peak.
If you are in Victoria, market arrangements differ from the hub-based STTM model used in Adelaide, Brisbane and Sydney, which AEMO outlines across the STTM overview and DWGM overview.
How do you select a winner without getting trapped by fine print?
Use weighted scoring. Price is important, but price without risk control is not a win.
A practical weighting model is:
- Total estimated annual cost using your data.
- Contract risk, including pass-through exposure and indexation.
- Operational fit, including billing, payment, and account support.
- Flexibility, including site changes, move-out clauses, and early termination.
Then run a contract validation step on the preferred offer. This is where you check the schedule matches the quote, the sites are correct, and the start date is achievable.
What does a good tender timeline look like?
Most tenders are faster than people think, but only if data is ready.
Typical flow:
- Week 0 to 1: Collect bills, interval data, and confirm scope.
- Week 1: Issue tender pack.
- Week 2: Retailer questions and clarifications.
- Week 2 to 3: Offers received.
- Week 3: Evaluation and shortlisting.
- Week 3 to 4: Contract review, signing, and implementation planning.
If you are close to an expiry date, you risk being pushed onto a higher default arrangement. Zembl’s article on renewal timing highlights how many businesses leave decisions late and then face avoidable urgency in its article on expiring commercial energy contracts.
What is the tender checklist you can copy and use?
Use this as your minimum viable tender checklist.
- Confirm tender scope: electricity, gas, or both.
- Confirm sites list and meter identifiers.
- Gather at least one recent bill per site per fuel, and interval data where available.
- Record current contract end dates, notice periods, and any early termination rules.
- Define required terms and a preferred start date.
- Decide your acceptable pricing structures and risk limits.
- Write clear inclusions and pass-through rules.
- Set a questions deadline and a response deadline.
- Decide your evaluation scoring method before offers arrive.
- Validate the preferred offer in contract form before signing.
- Plan implementation, including billing setup and any site changes.
Tender pack inclusions table
Offer comparison table (electricity and gas)
If you want a commercial energy tender run properly, Zembl can do the heavy lifting end to end. We collect and clean your site and metering data, build a like-for-like tender pack, go to our retailer panel for comparable electricity and gas offers, then model the results against how you actually use energy. Once you choose, we validate the contract paperwork, manage the changeover, and help check early bills so the pricing you signed is the pricing you get.
FAQs
What is the difference between a quote and a tender for business energy?
A quote is usually one retailer giving you a price on their preferred structure. A tender is you setting the rules, then asking multiple retailers to respond on the same scope and assumptions so offers are comparable. The value is not just competition, it is control, especially where time-of-use and demand charges can materially change outcomes.
How many retailers should be invited to an energy procurement tender?
Invite enough retailers to create competition without turning the process into noise. For most businesses, three to six credible retailers is workable. The right number also depends on your locations and meters, because not every retailer serves every network area. The goal is comparable, serious offers, not the longest list.
How long does a commercial energy tender process take?
With clean data, many tenders can be completed in a few weeks. The slowest part is often collecting interval data and confirming site details. Some processes also stretch if stakeholders cannot agree on risk settings, like whether to accept pass-through clauses. A defined timeline with a questions deadline keeps momentum.
What should be in a tender pack to get like-for-like offers?
A tender pack should lock down the site list, the contract start date, the terms you want quoted, and the pricing structure you will accept. It should also state what must be included in rates and what can be billed separately. If you have smart meters, include interval data because it drives demand and time-of-use outcomes.
What are the biggest watch-outs in electricity tenders?
The biggest watch-outs are demand charges, time windows, and pass-through clauses. Demand charges can be based on your highest 30-minute peak, so one operational spike can shape a month’s cost if you are on the wrong tariff structure. Time windows also vary, which makes “cheap peak rates” meaningless unless the window matches your usage.
What are the biggest watch-outs in gas tenders?
Gas watch-outs are usually around what is included in the unit rate and how seasonal swings are handled. If your business uses much more gas in winter, you want to know whether the pricing assumes a flat profile or bakes in a risk premium. Also check how transport and distribution items appear, because those can move independently of commodity pricing.
Can you run one tender for both electricity and gas?
Yes, and it is often cleaner for governance. A combined tender can help align start and end dates and give you one view of total energy spend. It can also reduce admin if you prefer fewer retailers. The trade-off is that the best electricity retailer for your sites may not be the best gas retailer, so allow for a split award if value differs.
What is a Letter of Authority in an energy tender?
A Letter of Authority is written permission allowing a representative to request information or act on your behalf for the tender process, such as collecting usage data from your current retailer. It helps remove bottlenecks and stops repeated back-and-forth. You should still control decisions, including who is invited, what is accepted, and what gets signed.
What should you do after you sign the new energy contract?
Implementation and checking matter. Confirm the start date, make sure each site is correctly set up, and check the first bills against the agreed schedule. If you have multiple sites, align your internal process so invoice coding and approvals are consistent. Ongoing monitoring is how you catch errors, tariff mismatches, or unexpected pass-through items early.
Related Zembl resources:
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