Make a payment

Energy Insights

7 Questions You Must Ask Before Signing an Energy Contract

Introduction

In the complex and often volatile Australian energy market, signing an energy contract is a decision that warrants careful scrutiny. Before committing, it's essential to conduct a thorough evaluation to ensure that the contract aligns with your business's financial and operational goals. Here's a checklist of the must-ask questions before you sign on the dotted line.

Checklist of Questions Before Signing an Energy Contract

#QuestionImportance
1What are the terms of the contract?Ensures clarity on duration and obligations
2What is the tariff structure?Affects cost based on consumption patterns
3Are there any hidden costs or fees?Avoids unexpected expenses
4How is energy sourced?Aligns with sustainability goals
5What are the conditions for renewal or termination?Clarifies flexibility and exit options
6How does the contract accommodate changes in energy usage?Adapts to fluctuating business needs
7What customer support and services are offered?Assesses the level of post-sale service

Explaining Each Question

1. What are the terms of the contract?

Understanding the length of the contract and your obligations within that period is crucial. It is important to know:

  • The start and end date of the contract
  • How and when the price you pay can change
  • Your obligations regarding consumption levels

These details help ensure that the contract will align with your operational timeline and budgeting forecasts.

2. What is the tariff structure?

The tariff structure determines how you are charged for the energy you use. Different structures can include:

  • Fixed tariffs, which provide price certainty
  • Variable tariffs, which fluctuate with the market
  • Time-of-use tariffs, where prices vary at different times of the day

Your business's energy consumption pattern should guide your choice of tariff to minimise costs.

3. Are there any hidden costs or fees?

Additional fees can catch many businesses off guard. Always ask for a comprehensive breakdown of costs, which may include:

  • Connection and disconnection fees
  • Service charges
  • Payment processing fees

Knowing these in advance will prevent unexpected strain on your budget.

4. How is energy sourced?

The source of your energy can impact your business in several ways, including cost and corporate social responsibility:

  • Renewable energy contracts may offer price stability and align with green initiatives.
  • Non-renewable energy may be cheaper but can come with reputational and environmental costs.

Decide what aligns best with your company values and financial objectives.

5. What are the conditions for contract renewal or termination?

Understanding the renewal and termination policy is critical to maintain flexibility:

  • Look for auto-renewal clauses that could lock you into unfavourable terms.
  • Check the notice period for contract termination to avoid penalties.

This knowledge provides leverage and control over your energy contract lifecycle.

6. How does the contract accommodate changes in energy usage?

Energy needs can fluctuate due to various factors. Your contract should have provisions for:

  • Adjusting to significant increases or decreases in energy usage
  • Options for energy efficiency improvements and incentives

Flexibility in the contract allows your business to adapt without facing severe financial repercussions.

7. What customer support and services are offered?

Effective post-sale service can define your experience with an energy provider:

  • Ensure there is a clear point of contact for support.
  • Confirm the availability of account management and dispute resolution services.

Good customer service is essential for resolving issues quickly and effectively.

Conclusion

Asking these questions before signing an energy contract in Australia is not just due diligence; it’s a strategic business practice. The right energy agreement can lead to significant cost savings, enhanced operational efficiency, and a better alignment with your company’s sustainability goals. Approach energy procurement as you would any major business decision – with careful consideration and attention to detail.

FAQ

Q1: Can a business change its tariff structure after signing a contract?

A: It may be possible, depending on the terms of the contract, but typically this would require renegotiation or waiting until the end of the contract term.

Q2: Why is it important to ask about the source of energy?

A: Knowing where your energy comes from can affect your business’s environmental impact and compliance with sustainability regulations or goals.

Q3: What should a business do if it’s unhappy with its current energy contract?

A: It should review the contract’s terms regarding dispute resolution and contact customer service to discuss any issues. If the contract is nearing its end, the business can also start shopping around for a better offer.

Q4: How can a business ensure it doesn't miss the termination notice period?

A: Businesses should keep detailed records of contract terms and set reminders well in advance of the notice period to evaluate the contract and decide on renewal or termination.

Ready for change? Contact us.

    Subscribe

      © 2021 Energy Action. All rights reserved. ABN 90 137 363 636
      Contact Us
      crosschevron-down linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram