Last week, we reviewed the possibility of price fixing and the negative price impact on consumers. The above chart illustrates that 44% of our total energy cost is derived from the wholesale market (typically the area price fixing would take place if present).
With businesses having a relatively low level of influence on the wholesale commodity price (largely determined by supply, demand and market sentiment) we must shift our attention to the other elements that make up our energy cost. 56% of business energy costs are not directly related to the commodity price – Why is this important you may ask? It’s important because these costs are manageable.
Your broker is uniquely positioned to advise on the remaining 56%. For example, distribution costs vary across the country and before erecting an energy intensive factory your broker can advise on areas where distribution costs are lower than average. Taxes and environmental implications can be reduced or in some situations avoided altogether. For example, by choosing a green source of energy you can avoid paying CCL tax, traditionally, there is a premium attached to buying green, however, your broker from time to time may have access to options without a premium.
Many renewable generation options provide 100% tax relief allowing your business to offset any capital expenditure on your corporation or operating tax. Some suppliers have lower operating costs and working as an intermediary brokers have the ability to highlight those that are particularly focused on attracting new business of a particular type.
Whilst there are factors outside the control of businesses, there are many options and opportunities to manage your energy costs. We encourage you to contact your broker today.