I was on a site visit with a grain producer last week, helping him to understand why his electricity bill had gone up dramatically during the winter.
He’d thought he’d be using more energy during this period, when in fact, his fixed charges had gone up dramatically under a recent regulatory change called P272.
P272 takes tariffs, which were based on a simple price per unit and fixed charge basis, and transforms them into something based on ½ hourly measured usages, plus some extra fixed charge components.
These tariffs are more reflective of the underlying system costs, so they tend to have bigger fixed charges and lower unit charges. Unfortunately, this doesn’t necessarily suit grain producers as all their use tends to be in the summer/autumn time and that’s when they expect most of their big bills to come. It simply doesn’t seem right to have significant charges pushed into the winter.
Unfortunately, P272 is difficult to avoid as it is a regulated change, so you have to make the best of it. The good news is that, if you do this right, things might not be any more expensive and, in some cases, they may end up cheaper.
My tips for grain producers facing these changes are as follows:
- Before getting too aggravated about high winter costs, work out the average cost per unit of energy over a period of a year. It might not be too much different than before.
- Make sure your high fixed cost charge is broken down into the appropriate components so that you can see what you can challenge. Don’t accept bills that simply state ‘fixed charge’ or ‘Government and Administration Charges’ - this is nonsense.
- Find out your stated ASC (Available Supply Capacity). This is basically the highest used or stated capacity of your system for a year and is measured in kVA. It’s paid every month and it’s not uncommon for this figure to be higher than it needs to be.
- Shop around for a good metering deal. You’ve now got to pay for your metering services on top of the other parts of the bill and this figure can vary significantly between providers.
- Consider having a more complex tariff arrangement, with the ‘distribution’ elements of your bill set out separately. There is a particularly high-cost period for a few hours on weekday early evenings. Avoid this and your average unit price will come down.
Talk to our Utility Contracts Management team for more advice and competitive deals to cut your costs.