Innovating to stay open or hibernating your business?

Written by Energy Action

Last week, our General Manager, Business Services, Andy Young held his most recent webinar providing timely advice and updates for businesses to help them navigate Covid-19. The virus lock down has seen energy demand from businesses drop, according to Energy Networks Australia’s analysis of demand data for the AusNet network in Eastern Victoria during March. The fall in demand was most evident for small business customers (down 12% from the same period a year ago). Demand from large business customer was down 5% while household consumption was up 5%. For energy retailers, this means a shift from lower-margin customers to higher-margin customers, accompanied by a different credit risk profile. Overall AusNet demand was down 2% from March 2019. 

More generally, demand was down in most states:

Demand table for retail energy prices

Source: AEMO


Interesting to note here that demand decreases are not as significant in April vs May – which may in part be attributed to other factors which can affect demand such as weather.

Retail Prices:

Retail Contract Prices
**Retail prices as per Energy Action’s Price Index which is based on prices we see in the market when running auctions. 

Innovate…

To assist your cash flow position, we have teamed up with one of our solar partners to design an innovative way to release capital through one of your non-core assets. If you are one of the 20% of our customers with behind-the-meter solar (solar on your roof), it is possible for you to sell your system at an agreed price to receive a one-off cash payment. Additionally, if you enter a behind-the-meter PPA for the energy generated by your old PV solar system, there is a six-month payment holiday.

As well as the cash payment and zero cost energy for six months, you won’t have any associated solar operational or maintenance costs. You also have the option to repurchase your PV system at a later stage. If this is of interest, you can register to learn more about Solar PV Buyback Package. 

It is possible to emerge from this crisis period in a stronger position by locking in a competitive advantage over your peers through reduced energy and other input costs. For example, 2020/21 electricity contract prices are at or below the cost of generation in some states. Prices will inevitably rise as generation is withdrawn due to inadequate returns in the sector. We therefore recommend taking advantage of today’s historically low prices to achieve savings of up to 50% or more when you consider electricity and certificate savings. If you have entered PPAs at higher prices than we are currently seeing please talk to us about the options available.
 

… or hibernate

Alternatively, if you intend putting your business into hibernation, we have developed an interactive PDF business hibernation checklist to ensure you are managing equipment and reducing electricity bills. If you are a client, first, contact us so that we can update your details and set up or alter any alerts. We can also work with you to ensure any contracts don't lapse and see you on default rates whilst in hibernation. Then notify your retailer of your plans and have bills diverted if needed.

Depending on the equipment you have, you will need to turn off or unplug them all at the powerpoint, turn off lights and ask maintenance contractors to reprogram time-locks on any lights and air conditioning systems, as well as discuss options with them to shut down cool rooms or reduce temperate settings.

Commercial and industrial customers should shut down machinery and generators in line with normal procedures.

Remember to maintain electricity supply to essential systems, including computer server rooms, security systems, security lights and external signage, along with fire systems. You can access the full hibernation checklist here.

Other support available

In early April, networks across NSW, Victoria and South Australia announced some tariff relief for small business customers. These include rebating network charges for those experiencing financial stress, as well as incentivising retailers to have payment plans available to impacted customers. They are also supporting retailers to not disconnect any small business customers and looking to minimise disruption from any planned outages.

The NSW, SA, VIC, WA, ACT and QLD Governments have also launched relief packages that can help small to medium businesses impacted by COVID-19 to reduce their energy costs.

A summary of major schemes and grants for businesses

State/Territory

Relief package

Key eligibility criteria

QLD*

$500 rebate on all power bills through its Power Relief Package.

Small businesses

Consume less than 100,000 kilowatt hours

Have an active account at 30 April 2020

Automatically applies against your bill

ACT

$750 rebate added to small businesses’ next power bill

Consume less than 100,000 kilowatt hours

Applies regardless of being on a standing or a market offer

NSW

The State Government is offering a small business grant up to $10,000 that can be used to pay energy bills, among other costs.

Small businesses and not-for-profit organisations

Are highly impacted by government restrictions leading to at least a 75% decline in turnover compared to the same period in 2019

Have annual turnover greater than $75,000

Employ 1-19 people

Have annual payroll below $90,000

SA

Emergency cash grant of $10,000 grant

Have been subject to closure or highly impacted by COVID-19 related restrictions

Employ people in South Australia.

Have annual turnover greater than $75,000

Have an annual payroll of less than $1.5 million

VIC

A one-off grant of $10,000 that can be used to pay energy bills, among other costs.

Have been subject to closure or highly impacted by COVID-19 related restrictions

Have annual turnover of more than $75,000

Employ people

Have annual payroll of less than $650,000

WA

$2,000 to $2,500 credits to small businesses. For more information read the statements on theSynergy and Horizon Power websites.

Synergy and Horizon power customers who consume less than 50,000 kilowatt hours

*QLD embedded network owners are also required to self-identify with their electricity retailer by 24 April 2020 and make the necessary billing system adjustments to ensure that their embedded network customers are provided with the relevant utility rebate. More information is available here.

For more information about the support available for businesses in each state, please visit our Government Utility Relief Payments page for a state-by-state overview.

What Energy Action can do to help you

  1. We will continue to engage with the retailers to get answers to your questions. In many cases we have found retailers are working on payment plans for affected customers on a case-by-case basis. Most have relaxed their minimum volume requirements at least for electricity during this time. As gas take-or-pay is reviewed on an annual basis, we will work with you to prepare to engage with the retailer and update you on any changes.
  2. We will also continue to address your specific needs. Over the last two weeks we have found no two customers’ requirements are the same. Everybody is in a unique situation so please contact us if you are encountering difficulty.
  3. We will also continue to keep you informed through our regular webinars, weekly Energy Market Wrap 5-minute videos and subscribe to receive our monthly eNewsletter, the Energy Market Update.
  4. We also encourage you to speak to your account manager. They are a valuable source of information that may be helpful to you at this time.