Expiring commercial energy contracts: The urgent issue businesses shouldn't overlook

Words by Zembl

Q&A with Energy Expert Sophie Gwilliam

The end of the calendar year is when about 70% of commercial energy contracts approach their maturity dates, and, just like when a fixed term mortgage comes to an end, it's a crucial time to both take stock, and take control of what happens next. Doing nothing can mean you risk being automatically rolled over onto default market energy rates which could be more than double the rates you secured previously, depending on where the market has travelled.

We asked Zembl energy expert Sophie Gwilliam who arranges energy contracts for commercial businesses every day to take us through the ins and outs of why renewing contracts earlier, rather than just before contract expiry, is a crucial strategy for protecting businesses’ future bottom lines.

Q: Why are November and December so key for businesses on commercial energy rates?

Sophie: A large portion of C&I Customers are contracted until the end of the calendar year, and this means there's a surge of customers looking to secure contracts, increasing demand. An increase in demand can cause an increase in pricing and may limit the amount of offers we are able to receive, giving retailers more power to become selective about who they put offers forward to. Acting early gives you a jump on the rush and dilutes some of those supply and demand dynamics in the buyer’s favour.

To add to the pressure on pricing, El Nino has now been declared, meaning higher temperatures and less rainfall. When temperatures increase, there becomes additional strain on the electricity generators as more electricity is lost in the transmission lines. This means the generators have to work to their capacity to deliver the demand, particularly around the warmer months in Australia.

Q: What are the risks associated with not renewing your commercial energy contract?

Sophie: Should a commercial customer not sign a new contract once it expires (whether that be with their current retailer or elsewhere), their site will fall onto the retailer's default rates. These rates are usually significantly higher than the contracted rate and therefore can cause bill shock to customers. Default rates do vary from retailer to retailer but there’s always a high risk in doing nothing.

Q: What are the normal December cut-off dates to remember for renewals?

Sophie: Typically, retailers will limit their offers for new customers after the 2nd week of December as they cannot guarantee a transfer date of the 1st of January after this time. That means the best time to act and talk to an expert about your energy rates is from early November until early December at the latest – the sooner the better really!

Q: How soon can customers talk to Zembl about our next contract?

Sophie: There's really no too soon – customers can talk to lock in their next contract and rates as early as they would like and we’ll simply secure their offer, wait until their current contract expires and arrange everything to switch them across when that time comes.

Q: What’s the pitch process for new contracts?

Sophie: Every business that approaches Zembl about their commercial energy contract receives our in-depth tender process for their energy, completely obligation-free. The first step is signing a Letter of Authority (LOA) which gives us permission to go to the market on their behalf in search of competitive offers. We then gather data from the business’s current retailer, including usage data and previous rates (which can take anywhere between 2-10 working days depending on the retailer), and also ask questions such as whether they have solar, if there are any lease restrictions and so forth so we can tailor the offer to their needs.

From there, we go to market, gather our top recommended offers and come back to present them. If they approve, they simply sign, then we kick into action to move them onto their new offer for another term.

Q: How long does it take to secure an offer through Zembl?

Sophie: Usually from the time we’ve gathered all necessary details, a response can be turned around in 4 business days, or even shorter if required.

How Zembl can help with early renewals

At Zembl, we have a full team of dedicated Energy Consultants just like Sophie who do all the heavy lifting and paperwork to secure energy contracts for hundreds of commercial businesses every year. We’ll keep you making informed energy choices with a dedicated account manager every step of the way.

So don't wait until your contract end date is looming and the renewals silly season is at fever pitch – start the process now and give your business the edge in locking in the best rates possible with our help.

Secure your new energy rates with Zembl today. Fill out our contact form, upload your bill, and let's start the conversation about your energy needs.

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