Navigating energy contracts: what to look for and avoid

Words by Zembl

Arranging energy for your business is not a “set and forget” exercise. Ideally, your business energy plan should never simply roll over to the next period once the contract ends. If it does, you’re missing out on a valuable opportunity to get a better deal and save money. 

While navigating the next energy contract for your business can be complex, there are some key questions to ask and factors to look for to find the best deal for your unique circumstances. 

4 things to look for when negotiating your energy contract

  1. Price and rate structure: Ask questions about the pricing model and rate structure so you understand exactly what you’re paying for. Some businesses may want to lock in a fixed-rate contract that offers price stability over a set period, protecting you against market fluctuations, while energy contracts with variable or time of use tariffs may be suitable.

  1. Contract length and terms: Longer contracts may provide more stability but could lock you into higher prices, which isn’t ideal if energy prices drop. Shorter contracts offer flexibility, but can be subject to price volatility. The terms are just as important as the length, so get clear on the terms and fees around late payments, payment terms and ending the contract early.

  1. Termination clauses: While not as common these days, some energy providers charge an 'exit fee' if a customer leaves the contract within the first couple of years. Before you sign anything, make sure you’re aware of any exit fees and termination costs.  

  1. Renewable energy options: With renewable energy a massive focus for the Australian energy sector, there are a growing number of opportunities to source green energy, which may align with your business’s sustainability and CSR goals. It may be beneficial to ask about sustainable energy options like solar roof panels or solar-powered hot water – it’s not only good for the environment, but good for your business’s bottom line, too. 

One big pitfall to avoid when reviewing energy contracts

As the saying goes, the devil is in the details. Make sure you ask the following questions so you’re super clear about all elements of the contract:

  • Are there any hidden fees such as administration charges or credit card fees?
  • What is your billing cycle and payment terms for business customers?
  • Do you charge any penalty fees for late payments?
  • Do your plans automatically renew? These can lock you into unfavourable terms or prices once your contract ends, so if the answer is yes, ask if you can opt out. 

One final piece of advice: don't settle for the first offer and stick with what your current retailer is offering you, without asking them for a better deal. Comparing multiple energy suppliers and options will help you ensure you're not paying too much for your business’s energy needs.

You don’t need to navigate the complexities of energy agreements on your own: our team of energy experts at Zembl can work out your needs and negotiate on your behalf to help you get the best possible deal. Contact Zembl by filling out the form below.

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