2023’s Electricity Agreements: Maximizing Benefits from Bulk Energy Tenders amidst Escalating Energy Prices
2023 Energy Price Increases
In recent years, the surge in energy prices globally and particularly in Australia has been unmistakable. The culmination of the COVID-19 pandemic and the unfolding crisis in Ukraine has greatly exacerbated the situation. Coupled with local dynamics since May 2022 like unscheduled generation outages and high commodity costs, it’s imperative now more than ever to strategize efficient ways to lessen the impact of these spiralling costs on common property energy agreements.
2021 Bulk Energy Tender
In 2021, we embarked on a journey to establish a bulk energy tender, grouping all of our smaller clients together to create a buying group. This approach aimed to aggregate the buying power of common property electricity and gas accounts, allowing us to negotiate better deals for our schemes. Read about it here. The outcome was fantastic, with savings all around. This group pricing achieved a 32% discount from Energy Australia’s reference price. The agreement expired at the end of September 2023. For clients who joined Strata Life after the 2021 tender, most benefited from being added to this group.
2023 Bulk Energy Tender
From early June 2023 Mike Simpson, our Strata and Business Operations Manager, has worked closely with our energy broker (Bulk Energy) to get the best deal for our schemes. “In 2021 the story for each client was ‘hey, we’ve saved you an estimated 20%, 30% sometimes 40% on your energy costs'” Mike says. “This was an easy sell and a clear display of an additional value Strata Life provides our schemes. The 2023 story is unfortunately a different one. Coming off such a great discount in the current market, the story of ‘hey, you will unfortunately be paying more, but we’ve done our best to limit the increase’, is a harder sell to schemes.
The following energy retailers were approached to quote via an request for pricing:
- AGL,
- Alinta,
- BlueNRG,
- Energy Australia,
- Origin,
- Powershop,
- Simply Energy, and
- Tango Energy.
Hew from Bulk Energy advises: “As a result of the increases since May 2022, the DMO (Default Market Offer) was increased by approximately 30% from 1 July 2023. Retailers have increased rates in line with the DMO and are offering relatively modest discounts at present. We believe more competition (in the form of higher offered discounts) will return to the market in 2024, and are thus recommending relatively short contracts of 12 months duration only.”
A 2023 Perspective on Strata Energy Tender: The Good, the Bad, and the Unpleasant
The Good
As beneficial as it might seem, establishing a bulk tender is not devoid of challenges. The process demands meticulous analysis and comparison, stretching over several months. Given the current instability in energy prices, aligning with a proficient and credible energy broker makes a world of difference. It’s imperative to conduct thorough research to sift through the many companies that promise stellar services but deliver less than satisfactory results, particularly in a time when energy markets are highly volatile.
The Bad
Despite its benefits, setting up a bulk tender comes with its set of hurdles, requiring extensive analysis over several months. Partnering with a proficient energy broker can be a game-changer in these volatile times.
The Unpleasant Reality of Commissions
The industry, unfortunately, is plagued with Strata Managers seeking commissions on common property energy accounts. A common practice which potentially inflates your final energy prices. At Strata Life, we again have decided not to receive a commission on your energy account. Further we have negotiated a 25% reduction in the standard commission our energy broker receives from the energy retailer, all to ease the burden of escalating energy costs.
The Impact and Results!
The tangible benefits to our clients have been noteworthy. In spite of the soaring energy prices, we’ve secured significant advantages for each scheme, reiterating our proactive approach to achieving reasonable discounts on energy accounts.
Benefits Highlight:
- Carbon-neutral electricity at no extra cost
- Flexible 12-month contracts, allowing to switch to a different retailer without cancellation fees
- Estimated total spend on the DMO was $649,883 (inc. GST).
- Estimated total spend contracting split between Energy Australia and Origin, $474,354 (inc. GST).
- Difference/savings benefit from the DMO, $175,529.97 (inc. GST), or 27%.
Conclusion
In these turbulent times, a well-implemented bulk energy tender can indeed make a marked difference. As we traverse through 2023, collaborating with well-informed and trustworthy brokers becomes essential, superseding the lure of commissions possibly offered to your Strata Manager.
At Strata Life, we continue to spearhead efforts in fostering transparency and sustainability, ensuring significant savings amidst these unparalleled challenges.
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 North Shore, Hornsby and the Northern Beaches areas, with excellent local contractors and superior local knowledge.
Helpful links
- The Strata Life advantage »
- Our service level guarantee »
- Our strata managers »
- The history of Strata Life »
- Changing strata managers »
Get in touch
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.
Telephone : 02 9456 9965
Email: contact@thestratalife.com.au
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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.