Are Unbundled Electricity Rates Better and Cheaper for Businesses in Perth and WA?
A tailored energy plan with unbundled electricity rates for businesses along with expert advice can help lower electricity costs. This article helps business owners determine whether unbundled electricity could benefit your business and reduce energy costs.
Bundled vs Unbundled Electricity for Business
Most business owners are not aware that they can choose between bundled electricity rates and unbundled electricity rates. Bundled electricity rates are inclusive of all charges and provide a business with a peak rate, off peak rate and daily supply charge. The benefit of bundled electricity rates is that it is simple and easy for a business owner to calculate the charges based on their consumption. The disadvantage is that bundled electricity rates may be higher than necessary during the supply term.
Unbundled electricity rates separate individual electricity charges so that a business owner knows exactly what they are being charged for. This provides transparency and gives the business owner the opportunity to reduce cost components of their electricity bill.
Quick Comparison Between Bundled and Unbundled Electricity
| Bundled | Unbundled |
|---|---|
| Simple to calculate charges and cost | More detailed and transparent costs |
| Easier to compare quotes and does not require sophisticated understanding | Requires more sophisticated understanding that can also benefit the business |
| Electricity Management savings are not passed through directly. Lower energy prices are realised over time | Electricity Management savings are passed through directly and realised in the next capacity year (October each year) |
| Energy retailers not flexible with rates | Energy retailers can be more flexible with rates |
| Potentially higher costs | Potentially cut costs by up to 30% |
| Suits smaller businesses that use between 50,000 kWh and 300,00 kWh per annum | Suits bigger businesses that consume over 300,000 kWh per annum |
Created by Amanda Energy
Understanding the Components of a Typical Electricity Bill
Energy ~ 33%
Peak Hours / Rates
Charges for consumption between 8am and 10pm Monday to Friday.
For bundled electricity supply agreements, the peak rates are inclusive of all other cost components except the daily supply charge. Unbundled rates exclude the other cost components such as Network and Capacity charges.
Off Peak Hours / Rates
Charges for consumption between 10pm and 8am Monday to Friday and all weekend.
For bundled electricity supply agreements, the off-peak rates inclusive of all other cost components except the daily supply charge. Unbundled rates exclude the other cost components such as Network and Capacity charges.
Daily Supply Charge
This is a daily charge for the availability of electricity supply to a site, independent of consumption and other charges. It is applicable to both Bundled and Unbundled agreements.
Capacity Charges ~ 22%
This charge is payable to the Australian Energy Market Operator to ensure there is sufficient generation capacity to meet demand during peak periods of consumption in the grid. This charge can be reduced with energy management advice.
Network Charges ~ 38.5%
This charge is for transmitting electricity and payable to Western Power. Various transmission tariffs are available, dependent on the grid connection and historical consumption. This charge may be reduced by modifying consumption patterns. Large use electricity consumers (over 1000 kVA demand) can select a Contract Maximum Demand and this can be optimised to minimise cost.
What are Transmission Loss Factor Adjustments?
This allows for the quantity of electricity that is lost in transmission from generators to the customer’s meter. The quantity of electricity “lost” is charged at the applicable energy price as the Loss Factor Adjustment. There is a Transmission Loss Factor (TLF) and a Distribution Loss Factor (DLF). Normally, the Unbundled energy rate is quoted as Loss Factor, and these charges are passed through at cost and payable to the Australian Market Energy Operator.
Renewable Energy Charge ~ 4.5%
This is payable to the Clean Energy Regulator to fund renewable energy as per Federal Government policy. It includes the Renewable Energy Target (LRET) with Generation Certificates (LGC), and the Renewable Energy Scheme (SRES) with Small Scale Technology Certificates (STC). If your business does not have a solar PV system, take advantage of this scheme to benefit from Federal subsidies that reduce the cost of the system and in turn, help reduce energy consumption and costs.
Essential System Services ~ 1.5%
This is payable to the Australian Market Energy Operator for the cost to maintain 50Hz frequency in the grid and balance electricity supply with demand.
Market Fees ~ 0.5%
This is payable to the Australian Market Energy Operator for the cost of administrating the electricity market.
Learn how your business can optimise to reduce energy costs.
How business Owners Determine Whether to Change to Unbundled Electricity Rates
Talk to an energy expert to help reduce your business electricity expenses and determine whether switching to Unbundled rates is beneficial. Some energy retailers have the capability to complete a full analysis and provide a tailored energy plan. Other energy retailers simply offer prices without any advice. Certainly, understanding the cost components of your electricity bill and how to reduce charges can help but, partnering with an experienced energy retailer can make a big difference. An Unbundled electricity agreement combined with a clear plan can help reduce electricity costs for your business, if your business meets the right criteria.
| Defining Questions and Criteria | Yes/No |
|---|---|
| Does your business consume over 300,000 kWh per annum? | If No, Bundled might be the best option. Obtain an Unbundled quote and compare the estimated annual expenditure. |
| Does your business use over 300,000 kWh per annum and has a solar battery storage system? | If No, Bundled might be the best option. If Yes, Unbundled is recommended to help reduce Capacity Charges. |
| Does your business use over 300,000 kWh per annum and have a backup generator on site? | If No, Bundled might be the best option. If Yes, Unbundled is recommended to help reduce Capacity Charges. |
| Can your business reduce load/consumption between 4pm – 7pm over the summer? | If No, Bundled might be the best option. Use your generator to reduce peak demand and reduce Capacity Charges. |
| Does your business use large amounts of refrigeration or heating? | If No, Bundled might be the best option. Complete an assessment of your Power Factor and demand analysis. Also, ask an expert how to use equipment to help reduce Capacity Charges during the hot season. |
| Does your business have equipment that draws a lot of electricity and takes time to start up and shut down? | If No, Bundled might be the best option. Complete an assessment of your Power Factor and Voltage Optmisation analysis. |
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