Everything small businesses need to know about energy price change letters

Words by Zembl

If you're a small business owner, you are likely to keep a close eye on expenses, and energy costs are no exception. Recently, energy retailers across Australia have been notifying customers of rate changes through official letters via post or email.

These letters often accompany adjustments set out by the Default Market Offer (DMO) and the Victorian Default Offer (VDO). Understanding these changes is essential for managing your business expenses effectively.

In this article, we'll break down what these letters mean, how they affect your business, and the steps you can take to ensure you're getting the best deal.

What is a price change letter?

Basics of the price change letter

Anytime energy retailers adjust a customer's energy rates, they are required to notify them with a letter. This letter isn’t just a formality; it contains critical information about your new rates, the start date of these rates, and your National Meter Identifier (NMI).

What to look for

The letter will provide context for the changing prices, explaining why the adjustment was necessary. This might include factors like increased wholesale costs, regulatory changes, or shifts in supply and demand. However, the most crucial parts are the new rates and when they will come into effect.

Importance of the NMI

Your NMI is a unique identifier for your meter and is essential for any energy-related transactions or inquiries. Ensure the NMI listed matches your records to avoid any billing errors.

Why did my energy rates change?

Understanding DMO and VDO

In Australia, the Default Market Offer (DMO) and Victorian Default Offer (VDO) are benchmarks set by the government to ensure fair pricing in the energy market. These rates are reviewed annually and can influence the rates set by energy retailers.

Factors influencing price changes

Energy prices can fluctuate due to several factors, mainly:

  • Wholesale market prices: Increased demand or supply constraints can drive up wholesale prices.
  • Regulatory changes: New policies or regulations can impact the cost of supplying energy.
  • Operational costs: Retailers may adjust rates to cover rising operational costs, including marketing, debt, headcount, and other business expenses.
  • Network and distribution costs: These costs account for around 30-40% of your total energy bill. They cover the maintenance and upgrading of infrastructure needed to deliver electricity from the power plants to your business premises. Increases in these costs can directly affect your rates, as energy retailers pass them on to consumers.

Understanding these elements can help you anticipate future changes and better manage your energy budget. If the new rates are higher, it could mean increased operational expenses, while lower rates could offer some relief.

How to read your price change letter

Key sections to focus on

When you receive your price change letter, focus on these sections:

  • New rates: Compare these with your current rates to understand the difference.
  • Effective date: Note when the new rates will apply.
  • Contact information: Retailers often provide contact details for any queries or concerns.

Comparing old and new rates

Use the information provided to calculate the potential impact on your monthly and annual energy costs. This will give you a clearer picture of how the changes will affect your business finances.

Spotting errors

Ensure all details, especially the NMI, are accurate. Any discrepancies should be reported immediately to your retailer.

What should you do next?

Compare your current plan

This is an excellent opportunity to review your current energy plan. Are you on the best plan for your needs? Whether your rates have gone up or down, it might be time to look for better options.

Get in touch with the Energy Experts at Zembl for a free business energy bill review. Our team can analyse your current rates, compare them with the best offers from our panel of Aussie retailers, and identify potential savings. Plus, we can switch you to the new retailer on the spot, so you start saving instantly.

Find your savings with a FREE Energy Review
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