Common Property Electricity – The good, the bad and the ugly of a strata energy tender
We have recently completed a bulk energy tender for many of our small clients. A bulk energy tender forms a buying group using all of the common property electricity and gas accounts. The buying group creates economies of scale translating into a better buying power.
The concept is simple, but in reality, there is much more to consider. In this post, I will discuss what I have learnt from our recent bulk tender. Including the good, the bad and the ugly.
The economies of scale created provides a stronger buying power. A usual (small) common property electricity or gas account consumes an insignificant amount of electricity in the eyes of the energy retailers. By grouping accounts together, energy retailers are more interested in winning the contract. As a result, this will make the energy retailers more competitive. Every cent saved in an owners corporation is important, however, money is not the only metric to consider.
For example, sustainability and renewable energy are important to the Strata Life team and many of our customers. We negotiated hard to have a more environmentally friendly option included. As a result a Carbon Neutral plan has been included for all our customers at no additional cost (this often costs an additional 10%).
A bulk tender can take several weeks to put together and requires a great deal of analysis and comparison. Partnering with a knowledgeable and reputable energy broker provides a huge benefit. Do your research as many companies out there advertise and push these services but provide substandard service. Often these companies offer lucrative commissions to the Strata Manager (see “the ugly part” below) to win the business at the expense of a common property account.
The ugly (commissions)
Many Strata Managers receive a sizable energy commission. This is paid either from the energy retailer or from the energy broker they have partnered with. The commission is directly linked to their customer’s energy accounts. Despite what they may claim (if they do disclose the commissions), this does affect the final energy prices you pay for your common property account.
To date, Strata Life has not received any commissions for their customer’s energy accounts. As a further commitment to ensuring our clients pay as little as possible for common property energy, our energy broker has decreased the standard commission they received from the energy retailer by 25%.
The important part – results!
While we aren’t here to focus on the results, we can’t not discuss them to show the benefit of a group tender. Remember this tender was for our small customers only.
The average additional saving is over $290 per year for each strata scheme. This figure on its own may be somewhat unimpressive, however indicates how proactive Strata Life has been in the past to ensure customers receive a reasonable discount on their energy accounts. If our customers had not received a discount in the past, the average saving would be over $720 per year. And, a Carbon Neutral plan is included at no additional cost.
Results for some of our new clients:
38 lot apartment building in North Gosford to save 11% (est. $508.45 per year)
20 lot mixed-use scheme in Dee Why to save 27% (est. $3,132.15 per year)
23 lot apartment building in Mona Vale to save 31% (est. $5,723.65 per year)
A bulk tender certainly has its advantages, if conducted correctly. Ensure the broker used is knowledgeable and reputable and hasn’t been selected purely based on the commissions they offer to your Strata Manager.
About Strata Life – Strata Management Services
At Strata Life we strive to take the pressure of the day to day running of a strata scheme off of the shoulders of the committee members and owners. Whilst the nature of strata itself does mean that the owners/ committee are responsible for the decisions, the pressure is reduced by having a proactive manager provide guidance with a plain sense approach and quickly actioning issues as they arise.
We appreciate Committee members often have full time jobs and busy lives. Add to this that the strata scheme is often your home where Committee members do not want to have to police other residents.
Our aim is to minimise the work and time where we can, take on the role of reminding owners and residents of the by-laws so that everyone can peacefully enjoy community living.
Our team has extensive experience with properties on the Upper North Shore, Hornsby and the Northern Beaches areas, with excellent local contractors and superior local knowledge.
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Whether you’re an existing client or not, our strata managers are here to help with all matters relating to strata schemes and community living. Our office is open Monday – Friday, 9 am – 5 pm to answer your call or, for after-hours assistance, please complete our online enquiry form and we’ll get back to you the following business day.
Disclaimer: The information contained in this article is general information only and not legal advice. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any action or otherwise rely upon its contents in any way. Strata Life disclaims any liability for negligence or otherwise in any way connected with this article.