Make a payment

Energy Insights

Top Tips for Commercial Gas Deals

commercial gas deals involve negotiating contracts with gas suppliers to secure favourable rates and terms, ensuring reliable and cost-effective natural gas supply for business operations

Commercial gas deals involve negotiating contracts with gas suppliers to secure favourable rates and terms, ensuring reliable and cost-effective natural gas supply for business operations.

Key takeaways

  • Thoroughly Understand Your Gas Usage: Review past bills to identify average and peak usage, which is crucial for negotiating tailored deals.
  • Compare Multiple Suppliers: Don’t settle for the first offer. Compare rates, services, and reviews to find the best value.
  • Negotiate Terms Effectively: Use your usage data to negotiate better rates and terms, and ask for discounts or additional services.
  • Consider Long-term Contracts: These often offer lower rates but ensure they provide flexibility to adapt to market changes.
  • Read the Fine Print: Be aware of hidden fees and penalties in the contract to avoid unexpected costs.
  • Evaluate Supplier Services: Look beyond price to consider the supplier’s reputation, customer support, and additional services like energy audits.

Estimated Reading Time: 8 minutes

Introduction

Securing the best commercial gas deals for your business might seem daunting, but with the right guidance, it's entirely possible. In today’s competitive market, the costs of energy can significantly impact your bottom line, making it crucial to secure favourable gas rates and terms. This comprehensive guide will equip you with expert tips and detailed insights into the world of commercial gas contracts, from understanding different rate types and contract lengths to effective negotiation strategies and market monitoring. By following these steps, you can ensure your business not only saves money but also optimises energy use, providing a solid foundation for sustainable growth. Whether you are a small business or a large enterprise, these strategies will help you navigate the complexities of commercial gas deals with confidence and clarity.

Understanding Commercial Gas Deals

What is a Commercial Gas Deal?

Commercial gas deals are contracts specifically designed for businesses, setting the rates and terms for their gas usage. These deals differ significantly from residential gas agreements due to the higher volume of gas consumption and the need for tailored terms that align with a business's operational needs. For instance, a factory that operates 24/7 will have vastly different gas requirements compared to a small office that only operates during standard business hours. This complexity necessitates a more detailed approach to negotiating and managing these contracts, ensuring that the terms are suitable for the business's specific circumstances and consumption patterns.

Key Components of a Commercial Gas Deal

A commercial gas deal is typically composed of several critical elements that determine the overall cost and service quality. Here’s a closer look at these components:

Rate Type

The rate type is a fundamental aspect of any commercial gas deal. Businesses can choose between fixed and variable rates:

  • Fixed Rate: A fixed rate remains constant throughout the duration of the contract. This type of rate provides stability and predictability in budgeting, as the business will pay the same price for gas regardless of market fluctuations. Fixed rates are particularly beneficial for businesses that prefer a steady and predictable cost structure.
  • Variable Rate: A variable rate can fluctuate based on market conditions. This means that the price of gas can increase or decrease over time, depending on factors such as supply and demand, geopolitical events, and economic trends. While variable rates can potentially offer lower prices during periods of low demand, they also carry the risk of higher costs if the market price of gas increases.

Contract Length

The length of a commercial gas contract can significantly impact the rates and terms. Contracts typically range from one to five years, with each option having its advantages and disadvantages:

  • Short-term Contracts (1-2 years): These contracts offer greater flexibility, allowing businesses to renegotiate terms or switch suppliers more frequently. However, they might come with higher rates due to the increased risk for suppliers.
  • Long-term Contracts (3-5 years): Long-term contracts often provide lower rates because suppliers value the security of a long-term commitment. However, these contracts can be less flexible and may include penalties for early termination or changes in usage patterns.

Supplier Services

Beyond supplying gas, many providers offer a range of additional services that can add value to the contract. These services might include:

  • Customer Support: Reliable and responsive customer support is crucial for addressing any issues or concerns that may arise during the contract period.
  • Energy Audits: Some suppliers offer energy audits to help businesses identify areas where they can improve efficiency and reduce costs.
  • Efficiency Programs: These programs are designed to assist businesses in implementing practices and technologies that reduce gas consumption, thereby lowering overall costs.

Steps to Secure the Best Commercial Gas Deals

Assessing Your Gas Usage

The first step in securing the best commercial gas deals is to understand your business’s gas consumption patterns. This involves a detailed analysis of your past gas bills to identify your average usage and peak consumption periods. Here’s how to approach this process:

  1. Collect Past Bills: Gather your gas bills from the past year or more. This will give you a comprehensive view of your consumption over different seasons and operational cycles.
  2. Analyse Usage Patterns: Look for patterns in your gas usage. Identify months with higher or lower consumption and consider the factors that may have influenced these variations (e.g., seasonal changes, increased production, or maintenance activities).
  3. Calculate Average and Peak Usage: Determine your average monthly usage and identify peak consumption periods. This information will be crucial when negotiating with suppliers, as it provides a clear picture of your needs and helps you secure a deal that aligns with your usage patterns.

Comparing Suppliers

Once you have a clear understanding of your gas usage, the next step is to compare different suppliers. This involves more than just looking at rates; you should also consider the overall value and service quality each supplier offers. Here’s how to effectively compare suppliers:

  1. Research Suppliers: Start by compiling a list of potential suppliers. Look for established companies with a good reputation in the industry.
  2. Check Reviews and Ratings: Read reviews and ratings from other businesses to gauge the reliability and customer service of each supplier. Online review platforms, industry forums, and word-of-mouth recommendations can provide valuable insights.
  3. Request Quotes: Contact each supplier to request quotes based on your specific usage patterns. Make sure to ask about any additional services or incentives they offer.
  4. Compare Rates and Services: Compare the rates, contract terms, and additional services offered by each supplier. Consider not only the cost but also the overall value and potential long-term benefits.

Negotiating Terms

Negotiation is a critical step in securing the best commercial gas deals. Here’s how to approach the negotiation process:

  1. Prepare Your Data: Use the information you gathered about your gas usage to support your negotiation. Highlight your average and peak usage, and explain any specific needs your business has.
  2. Set Your Priorities: Identify what is most important to your business, whether it’s the lowest possible rate, flexible contract terms, or additional services. Knowing your priorities will help you focus your negotiation efforts.
  3. Be Ready to Compromise: While it’s important to aim for the best possible deal, be prepared to make compromises. For example, you might agree to a slightly higher rate in exchange for better customer support or additional services.
  4. Ask for Discounts: Don’t hesitate to ask for discounts, especially if you’re willing to sign a long-term contract or switch from a competitor. Suppliers are often willing to offer incentives to secure your business.

Considering Long-term Contracts

Long-term contracts can offer significant cost savings, but they also come with certain risks. Here’s what to consider when evaluating long-term contracts:

  1. Stability of Your Business: If your business’s gas usage is stable and predictable, a long-term contract might be more advantageous. However, if your usage patterns are likely to change, a shorter contract might offer more flexibility.
  2. Market Conditions: Consider the current and projected market conditions for gas prices. If prices are expected to rise, locking in a long-term rate could provide significant savings. Conversely, if prices are likely to fall, a short-term contract might be better.
  3. Contract Flexibility: Look for contracts that offer some flexibility, such as the ability to adjust rates based on significant market changes or to renegotiate terms after a certain period.

Staying informed about market trends is essential for making informed decisions about your commercial gas deals. Here’s how to keep track of market trends:

  1. Follow Industry News: Regularly read industry news and reports to stay updated on factors that can influence gas prices, such as supply and demand, geopolitical events, and regulatory changes.
  2. Consult with Experts: Consider consulting with energy market experts or using market analysis services to get professional insights into current and projected trends.
  3. Review Supplier Updates: Many gas suppliers provide market updates and forecasts as part of their customer service. Take advantage of these resources to stay informed about price trends and potential opportunities for locking in favourable rates.

Common Pitfalls to Avoid in Commercial Gas Deals

Not Reading the Fine Print

One of the most common mistakes businesses make when securing commercial gas deals is failing to thoroughly read and understand the terms and conditions of their contract. This oversight can lead to unexpected costs and complications down the line. Hidden fees and clauses can significantly impact your overall costs and the financial viability of the deal.

Key Areas to Watch

  • Early Termination Fees: Many contracts include penalties for terminating the agreement before its end date. These fees can be substantial, potentially wiping out any savings you hoped to achieve by switching suppliers early.
  • Administrative Costs: Some contracts may include various administrative fees that are not immediately apparent. These can add up over time and increase your overall expenditure.
  • Additional Charges for Services: Be aware of any extra costs for additional services that might be included in your contract. For example, fees for meter readings, maintenance, or customer support services could be hidden in the fine print.

By carefully reviewing the entire contract and seeking clarification on any unclear terms, you can avoid these pitfalls and ensure you fully understand the financial implications of your agreement.

Ignoring Additional Services

Another common pitfall is overlooking the additional services that some gas suppliers offer. While the primary focus might be on securing the best rate, these additional services can provide significant long-term benefits that should not be ignored.

Examples of Valuable Services

  • Energy Audits: Some suppliers offer energy audits to help you identify inefficiencies in your gas usage. By pinpointing areas where you can reduce consumption, these audits can lead to substantial cost savings over time.
  • Efficiency Programs: These programs may include recommendations for optimising your gas usage, such as upgrading equipment or implementing new practices. Efficiency programs can help lower your overall gas consumption and reduce costs.
  • Customer Support: Reliable and accessible customer support is crucial for resolving any issues that may arise. Good customer service can save you time and hassle, ensuring that any problems are quickly addressed.

When comparing suppliers, take the time to evaluate the additional services they offer. These services can enhance the overall value of the contract and contribute to long-term savings and operational efficiency.

Focusing Only on Price

While securing a competitive rate is important, focusing solely on price can lead to other significant issues. It’s essential to consider the quality of service and reliability of the supplier, as these factors can greatly impact your overall experience and satisfaction.

Consider the Following Factors

  • Supplier Reputation: Research the supplier’s reputation within the industry. Look for reviews and testimonials from other businesses to gauge their reliability and customer satisfaction levels.
  • Customer Support: Assess the quality and availability of the supplier’s customer support. Reliable customer service is crucial for addressing any issues that may arise and ensuring a smooth and efficient service.
  • Contract Flexibility: Evaluate the flexibility of the contract terms. Consider whether the supplier allows for adjustments based on changing market conditions or business needs.

A low-cost deal may not be worth it if the supplier provides poor service or is unreliable. It’s important to balance the cost with the quality of service to ensure you get the best overall value for your business.

Conclusion

Securing the best commercial gas deals requires careful research, thorough understanding of contract terms, and strategic negotiation. By taking the time to assess your gas usage, compare suppliers, negotiate favourable terms, and stay informed about market trends, you can ensure your business gets the best possible deal. Remember, the goal is not only to secure a low rate but also to obtain a reliable and high-quality service that supports your business needs.

Call to Action: Visit Energy Action today to explore your options and start saving on your commercial gas bills. With expert advice and top-notch services, they can help you secure the best deal tailored to your business needs.

FAQs

1. What is the difference between fixed and variable gas rates? Fixed rates remain constant throughout the contract period, providing stability and predictability in your gas expenses. This means your business will pay the same rate per unit of gas, regardless of market fluctuations. Fixed rates are beneficial for budgeting and financial planning, as they protect you from price spikes in the market. Variable rates, on the other hand, can change based on market conditions. This means that your gas costs can increase or decrease over time, depending on factors such as supply and demand, geopolitical events, and regulatory changes. While variable rates can offer savings during periods of low market prices, they also carry the risk of higher costs during price surges.

2. How long should my commercial gas contract be? The length of your commercial gas contract should align with your business’s needs and the current market conditions. Contracts typically range from one to five years, with each option having its advantages and disadvantages.

Short-term Contracts (1-2 years)

  • Advantages: Greater flexibility to renegotiate terms or switch suppliers more frequently. This can be beneficial if you anticipate changes in your gas usage or expect market conditions to improve.
  • Disadvantages: Often come with higher rates due to the increased risk for suppliers.

Long-term Contracts (3-5 years)

  • Advantages: Generally offer lower rates because suppliers value the security of a long-term commitment. They provide cost stability over a longer period.
  • Disadvantages: Less flexibility and may include penalties for early termination or changes in usage patterns. Ensure the contract terms allow for some adjustments based on significant market changes.

3. Can I switch gas suppliers mid-contract? Switching gas suppliers mid-contract can incur penalties, depending on the terms of your current agreement. These penalties are typically outlined in the contract and can include early termination fees or other costs associated with breaking the agreement before its end date. Before deciding to switch suppliers mid-contract, carefully review your existing contract to understand the potential financial implications. In some cases, it may be more cost-effective to wait until the contract expires to avoid these penalties. Alternatively, you could negotiate with your current supplier to see if they can match a better offer you’ve received from a competitor.

4. Are there any hidden fees I should be aware of? Hidden fees can significantly impact the overall cost of your commercial gas deal. It’s crucial to read the fine print of your contract to identify any additional charges that may apply. Common hidden fees include:

  • Early Termination Fees: Costs associated with ending the contract before its agreed-upon term.
  • Administrative Costs: Charges for various administrative services, such as billing, meter readings, or account management.
  • Service Fees: Additional fees for customer support, maintenance, or other services provided by the supplier.

Understanding these fees upfront can help you avoid unexpected costs and better assess the overall value of a deal. If you’re unsure about any terms or fees in the contract, ask the supplier for clarification.

5. How can I reduce my gas usage? While this guide focuses on securing the best commercial gas deals, managing and reducing your gas usage is also crucial for cost savings. Although specific efficiency measures are not covered here, it’s important to regularly review and optimise your gas consumption patterns. This can include conducting periodic audits of your usage, identifying peak consumption periods, and implementing strategies to reduce waste. By closely monitoring your gas usage and making adjustments as needed, you can further enhance your savings and improve your business’s overall energy efficiency.

Ready for change? Contact us.

Subscribe

[contact-form-7 id="38543" title="Footer 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