Energy prices at 3 year lows

The challenge of keeping your business operational through the COVID-19 pandemic is not going away quickly. Whilst we are expected to work from home and home school our kids, we are also expected to know what is happening in a very dynamic market.

We are all focused on taking action now – because it’s all about speed to value. However, we must also focus on opportunities that may benefit our businesses into the future post COVID-19.

An opportunity that presents itself now is Energy. An opportunity that can benefit your business well into the future.

You may or not be aware that Energy prices for the contested large market segment are at 3 year lows. In QLD and SA, prices are at 5 year lows. In recent times, prices have trended down since the highs or April 2017.

However, the last 6 weeks has seen prices fall off a cliff to the current low point. On average, prices are currently:

  • 28% lower than a year ago
  • 36% lower than 3 years ago

Energy Action Price Index 3 year lows

Source: https://www.energyaction.com.au/energy-procurement/market-intelligence/energy-action-price-index

What is the ‘Contestable Large Market’

If you spend more than $25K per annum in any one location, you are likely to be considered a ‘large market’ energy consumer. Energy retailers will negotiate prices with you based on your volumes, your load profiles and your risk (contestable large market). This can be facilitated through a third party energy broker or you can negotiate directly if your organisation has the expertise internally.

How do I take advantage?

If your energy contracts are due to expire within 18 months or within 6 months in WA, you can lock in your pricing now for an agreed period of time. Today’s low prices can be negotiated to start at the end of your current contract, acting as an effective hedging strategy for your energy costs. Terms of new contracts are typically 2 or 3 years, however any time frame can be negotiated.

In recent weeks, Supply Clusters has recommended a 4 or 5 year contract term to our customers to lock in today’s low prices for the long term.

Creating competitive tension

Supply Clusters has been working with its customers to manage Energy for over 15 years. As an aggregator of expenses, we look to leverage the buying power of over 300 customers to lower costs. However, aggregating energy is not a simple exercise due to the following points:

  1. Each state is typically has its own supply market
  2. An organisation’s load profile is assessed independently by suppliers
  3. An organisation’s risk profile is assessed independently by suppliers

Since being in the Energy space, Supply Clusters has recommended the use of a ‘Reverse Auction’ platform. Reverse auctions enable a customer’s individual volume, load and risk profile to be contested by a large number of energy suppliers.

Supply Clusters Energy Blitz – A unique opportunity to increase competitive tension

On 26th May 2020, Supply Clusters will be running its inaugural ‘Energy Blitz’. Effectively, we are coordinating for as many of our 300 customers to take their energy volumes to market on the same day!

The principle of the Energy Blitz is to have an enormous quantity of energy being auctioned on the same day, creating increased competitive tension. Each customer will still execute their own contracts through the supplier of their choice based on the results of the auction. When you consider combining today’s pricing and the concept of the Energy Blitz through a reverse auction platform, we have a unique opportunity at this current point in time.

What are the costs to participate in the Supply Clusters Energy Blitz?

Supply Clusters customers typically pay between $3,000 to $5,000 annual membership fees to access over 40 expense categories, of which Energy is one. The average ROI for members is 10 times.

Given the COVID-19 situation, the annual standard membership fee will be waived for any organisation currently not a customer of Supply Clusters that would like to take advantage of the Energy Blitz on 26th May 2020. Premium members who do take up a payable membership will also qualify for rebates.

Why should I consider the Supply Clusters Energy Blitz?

  1. Energy prices at 3 year lows (5 year lows in QLD & SA)
  2. You can lock in long term pricing for the next 4-5 years
  3. The Energy Blitz will create significant market tension by conducting a reverse auction for hundreds of customers on the same day – 26th May, 2020
  4. Supply Clusters membership fees waived

Supply Clusters Energy Blitz registrations close on Friday, 8th May, 2020

If you are interested in finding out more, please register your interest as soon as possible