How to Identify, Manage and Lower your Business' Energy Costs
Um, firstly, Thank you.
Thank you, everybody for coming to webinar on, uh, to manage business energy costs and how to identify and manage, uh, and and drive down those costs on Bruce Macfarlane.
I'm interim CEO and director here at Energy Action.
Uh, about I think, over 20 years, experience in energy markets across the gambit of wholesale retail and all the bits in between, uh, in terms of housekeeping.
We've got the camera on at the moment.
I'll turn that off shortly.
Certainly not distracted by by my wiggling around, so to speak.
I've got a couple of things up on the screen ones.
A power point which should be presented to you at the moment.
I'm sure marketing managers several come and knock on the door and tell me that I'm not doing it right.
If I'm not doing it right.
I've also got a script so far.
If I If I get a bit confused with moving the mouse around and things here with me if I do that, uh, one last thing of housekeeping if you've got questions, please to ask them.
But just type them into the check as we go through probably won't do that awkward silence at the end, saying any questions and just wait for note for nobody to ask any.
Ask them as you go along, and then we'll and then I'll and then I'll just do a rap through them, uh, get at the end.
So, um, that's that's that's the approach was going to take, um, sit back and enjoy what we would say.
Turn my camera now so we can focus on the content.
Um, in terms of what we're here to talk about today, it's Why does energy manage businesses? Um, but some context on that about market and zero.
Why should we think about energy cost management, as as a driver with any business to dementia, to think that through across the different domains for business, and then how to manage the business energy risks and commentary around that reached the functional areas.
How to manage risks across those areas? Um, First, the first thing that we want to talk about was, why does it matter if we looked at two businesses? Now, why does energy manage businesses now? Uh, they're no longer a smaller experience.
Uh, in recent years, uh, energy costs of skywriter skyrocketed and sustainability is increasingly becoming a top priority for the businesses here in Australia.
Um, with government, there's government legislation set to extend into climate reporting requirements, Uh, two more businesses than the English ones that we've got at the moment.
Uh, and, um and, uh, yeah, So the functions across is increasingly becoming important across the functions of procurement, finance and sustainability.
The factors that last year we saw the consequence of, uh, weed legislation.
We can vent investment incentives and lacklustre regulation resulting in an east Coast, uh, Australia East Coast energy crisis, um, exacerbated by a lack of gas reservation for domestic customers and the impact of solar and wind power on our ageing thermal generation.
Um, late last year, we saw the government introduced legislation capping domestic gas and coal prices.
Um, and they had an impact on, uh, asx electricity futures prices.
And this, of course, on the east coast.
Um, but what we're seeing at the moment is that prices are not falling any further than what they did after that legislation.
We're also seeing that the impact of those gas price caps was that, uh, gas fixed price gas contracts are not being offered, uh, to business customers.
So it's no longer just In our view, energy is no longer something that can be set and forget.
It needs active management, uh, and active consideration about how it can be how to manage it.
Uh, in terms of the other thing that's going on with energy is that carbon reporting is no longer for just big companies.
So historically, carbon reporting has been a big business issue a big business issue in Australia, with the mandatory ANGUS reporting applying to buy my account about 15,000 entities.
So we're seeing we're starting to see the impact of international legislation locally with, uh, with a government, um, responding to perhaps voter voter, you know, will, um, and and and moving some of the carbon legislation that we're seeing internationally, uh, took into our local environment.
Um, we also see Australian subsidiaries of international businesses, often European ones having a corporate driver to put in place local net zero strategies and the mission's report.
Um, so I've been a slide on this year, and I have, um, the climate legislation that we're seeing changing on my last slide, just just highlighted some of those international trends.
There's stuff in New Zealand that happened in the last couple of years, and there's, uh there's legislation in the UK that's happened around climate reporting.
Um, uh, we're seeing both those.
Those are two good examples.
I've got a view that Australia follows UK energy and emissions legislation.
Uh, and so we started to see that here in Australia.
So we saw Treasury run a start of a legislative process, um, to realign, ultimately to to align our reporting on emissions to international standards.
Um and, um, they would request for a submission on on a paper there earlier this year.
So our view is that it's important to put in place the infrastructure, so to speak, to manage, uh, to be able to respond to that.
Ultimately, legislation, for instance, the Treasury was running will have a life cycle of its own, say, 18, 24 months.
But it's coming, and it will extend beyond the current angers reporting requirements.
In my view, um, and energy is one of the complex categories to try and manage.
I mean in the data sense for those reporting requirements and putting that infrastructure in place early allows to enable reporting on it allows companies to be able to easily It simply responds to, um, potential legislation that's coming, coming, coming through.
Um, the things that we've got here, uh, in the following slides around, why should we think about energy management? We've got a place.
Um, well, energy action is investing heavily in technology to to manage, uh, energy data.
And to then we layer our services On top of that energy management, um, one of the things that we split that across a number of categories which is broadly aligned to the, in my view, the functions of energy management and one of those is energy procurement.
The things to think about, I think in a from a procurement space are probably threefold data their contract management.
And then there's the procurement process within our application and the road map that we've got in place where giving customers the ability to see, uh, futures um uh, spot.
And when I say spot pricing, its its electricity and gas.
Um, and it's with goodness gracious.
It's with some averaging put in place so that you can see the broader trends rather than the immediate effect of an outage that happened on Friday night, for instance.
Um, it's environmental and energy action has got the, uh has had the foresight to track business contract prices over an extended period of time.
If you go back to 2012 or so UH, time series.
But we're tracking and presenting to customers business contract prices that we get out of our option platform and giving customers the ability to see what's happening in the contracting market.
So it's just another tool in price series so that customers can understand People who are buying energy can understand what the what the trends might be associated with.
Um, the next thing I've got here is around, uh, automation, part of the way to manage energy management.
Um, sorry, Energy.
Invoicing is too receipt and convert, um, invoices into, uh into data that can be then integrated into an accounts payable, uh, platform, uh, and and downstream applications for, say, sustainability, reporting on emissions reporting in an effective way.
So our viewers and we've built the processes around it is that the financial functions within business should be automating those processes, and and many will have already I've been doing this for about 10 years.
Automation of the energy sector, uh, bills.
But, uh, so but energy is often a difficult category to automate.
There's a lot of complexity associated on the page.
Two of most bills, uh, and so having processes in place to do that is a useful way of managing the data flows that come into businesses.
Um, the other parts that are in terms of financial automation is that in my mind is 33 parts of energy, uh, invoicing automation.
Those are routine spin files, so it's allowing accounts payable people to be to have more effective automation.
Um, there's an accruals process.
So cash management is is able to be anticipated, uh, immediate.
You know, there's no surprise bills.
Often they are a certain forget exercise, but budgeting can be incredibly powerful.
Um, and, uh, having an automated bill feed of energy and voices allows you to track your budgets much more, much more clearly.
And in real time.
Um, yeah, so that's that's the accounts finance, the accounts payable and financial information stuff that we think it's important to customers to manage the category, Um, in terms of net zero and the sustainability manager.
We're seeing an increasing acceptance and encouragement from boards and senior management that the sustainability or emissions missions reporting function get integrated into the broader business cont.
Rather than just being stand alone function where you might do small projects, it will be a compliance function.
It's becoming much more pervasive in its needs and able ability to effectively support businesses.
Um, we're building l.
A zero capability that builds on that energy data management service that I talked about my, you know, the ability to receipt different data sources associated with energy, notably Bill data and Meta data, um, but also cite data and then be able to put in place, um net zero, uh to to to To record, I guess, is the right way to describe it.
Um, uh, sustainability plans, uh, that that can extend into the energy category, um, and then track against those the performance of the business in real time.
So as new meta data or build data comes in, it's a sustainability manager can see the consequences of, um, of what's going on in an operation it out in their in their in their business operations.
Equally, there should be the ability to see what invest the return on investment from, uh, you know, either solar things, which which often have a cost driver rather than the mission's dr but equally will have an emissions outcome, as well as other things that might have a direct cost and emissions drivers such as the purchase of offsets and carbon certificates.
So we've got a view that, um, having in place that that energy management sorry sustainability is now part of the energy management suite that that a business should be looking to have.
And it needs to sit on top of high quality data processes to support it.
That that happened in real time.
Um, the last slide that I've got here, I seem to rattle through them really, really quickly.
It's, uh, my style, I guess, is, um, that the business energy risks because of the high cost associated with energy that we're seeing at the moment.
Um, and that potentially could last for an extended period of time on the assumption that we're not going to get additional government intervention in in energy markets.
Um, is that there's there's sort of risks across procurement, finance and sustainability within the procurement function.
There's the need to, um, be informed about what the forward contracting markets look like and what the general trends are.
Uh, and if there is the opportunity, if procurement manager forms the view that there is the ability to react to, uh, energy trends, energy price trends, then then the data needs to be in place to to package up a request for tender or an auction process, certainly a procurement process that you call it that procurement process to take advantage of those trends.
Um, the second set of risks is across finance.
Um, there's a real need to manage energy data, that energy data and and, um, for a business, the highest risk, of course, is is disconnections, um underneath, which is accounts payable function and making sure that, uh, that things are paid in a timely way.
And in the correct way, um, that integration of energy data through to the account and accounts payable function into into broader AARP application means that that type of risk is mitigated is the flip side of it is the cash risk and the cash payment risk associated with unexpected invoices and things like that with good budgeting processes that are being updated in a reasonable time frame.
Um, you're well in real time and the place that in the case of the application that were put in place, you start to manage the cash payment risk that businesses could face associated with the energy and energy, energy contracting and energy payments.
And lastly, the last risk that of that town is around sustainability.
Um, we are seeing the impact of a progressive government here in Australia, the adoption of international legislative change happening that's happened or legislation that's happened internationally.
Uh, and, uh, the exploration of aligning local standards, accounting standards and risk emissions risk management standards to international standards.
Um, energy is a complex category.
Um, it's usually made complex by high number of sites or a high.
Um, you know, the volatility associated with contracting and that type of thing.
Um, then, in my view, the best way to mitigate it is to have I call it an infrastructure in place that allows businesses to manage that data and anticipate what those ultimately legislative requirements could be and to start delivering against them an effective way, reporting on them an effective way ahead of the legislation coming in place, uh, so that it's not a surprise that it becomes routine for business.
Easy for business.
Um, that's probably all I had to say.
That's that's That's the end of my topic, I hope.
I hope you enjoyed it.
I haven't got any questions in the, uh, thing there.
One from a company that specialises in the media reporting for business.
Um, NGO Action has adopted.
I want to answer that question directly.
Energy action, um, has invested in achieving climate active certification.
Um, uh, which is a government standard.
Uh, we did that because we wanted to demonstrate to to our business customers, um, that we is largely our cohort of customers, that it's not a hard thing to do.
Um, uh, in terms of providing a reference for businesses that can help, uh, zero reporting.
It's one of the things that energy action does do.
Um, we've got an application that helps to suspend us to sustain that type of, uh, reporting requirement.
Uh, separate things around auditing of requirements and things like that are often special services and energy.
Actually conservative refer people to to those sorts of things.
I've got another question here about Onboarding timeline and have you integrate customer business processes? Um, customer.
My experience is that customer onboarding should be, uh, should be quick, right? Let me dig into that.
The key constraints with on boarding a customer.
And when I say onboarding, I'm talking about into an energy management application, for instance, like energy action has built is that you have to collect data.
And that data is is often are sitting in a either a retailer's environment, building environment or portal environment.
If you're lucky or sitting in a third party application that that a customer might be using already, um, the If so, that's your key constraint.
Getting access to the data after you've got access to the data.
The conversion of that data into a standardised format and the delivery of services is short term and very quick process.
It's a cup day turnaround, so to speak, for a large customer with multiple sites, say, 300 plus sites.
It's not a hard process to convert data, and to present it to clients to to say, here's the services that you have, But the elapsed time to collect data can be problematic.
um so ways customers can mitigate that is have the keys to their retailer portals.
Energy retailer portals have Logan's to those energy retailer portals.
Um, you know, business like ours is able to connect to those energy retail portals and and collect the bills out of them very, very quickly.
Build products that allow us to do that.
Um, the metering is again often Emmanuel handshake with the metering provider to collect and receive those that data from monitoring provider as well.
Um, and lastly, there's the internal processes within the businesses to do.
They have energy contracts on hand and that type of thing, which they may not do, in which case you might have to ask the retailer for it.
And then you're into the time turnaround times For retailers, which can be an effective retailer as quick as three or three days ish, Um, and if it's uh an ineffective retailer or not, overworked retailer or under resource retail might be fairer.
That time period can extend out to a long time as long as, say, 20 days, particularly data.
Once data is received, an energy management application should be able to convert that into data that the customer sees very, very quickly, almost real time.
I can imagine that it's within hours.
And then there's some data cleanup associated.
Um, okay, those answers, those two questions, Um, so in terms of this webinar appreciate everybody's time I went I went great things on just for the sake of it.
But thank you for joining a webinar for around energy risks and haven't managed costs around in business energy.
If you've got any further questions, please feel to reach out to us.
I think we're pretty effective with publishing details on the Internet and that type of thing.
Um, my key take away here is that, uh, energy reporting is not just for big business anymore.
It's It's something that, uh, business need to be prepared for.
And the flip side of that is around the business cost.
Um, you can manage costs very effectively when you have the data and and can can get access to that data and have the have a good understanding of energy market trends and price trends associated with it.
So that thank you very much, I'll sign off.
Appreciate your time.
It's good to be able to give this presentation goodbye