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Energy retail offers
If your business uses around the same energy as a household, you should use a similar energy contract. A small customer is defined by Victoria’s Essential Services Commission as using no more than 40 megawatt hours of electricity or 1,000 gigajoules of gas per calendar year. Each energy retailer will offer a range of contracts, each with set terms. These contracts are either:
These are competitive offers from energy retailers and can be
- Fixed price. The price is set and can only be increased at the end of the 12-month period, or
- Non-fixed price. Prices can only be increased on 1 February for gas and 1 August for electricity each year.
They may include discounts, fixed price periods or other arrangements. Make sure you check any terms and conditions, for example, exit fees, to ensure they suit you.
They are contracts with minimum terms and conditions set by law and cannot be varied more than once every 6 months. If you don't negotiate the terms of your contract and choose an existing offer, your business is most likely on one of these contracts.
Victorian Default Offer
The Victorian Default offer (VDO) is a standing offer for electricity that is available to small businesses. The VDO price is determined by Victoria’s Essential Services Commission. The Victorian Government put it in place to provide a simple, trusted and reasonably priced electricity offer that safeguards electricity customers who are unwilling or unable to engage in the electricity retail market.
You can use Victorian Energy Compare to find the best energy offer and all currently available electricity, gas and solar offers.
Business in embedded networks
Some businesses may be part of an embedded network, such as businesses in shopping centres. They may receive a bill from the building operator rather than an energy retailer. The embedded network operator must comply with legal requirements, including maximum rates. There is more information on licencing at Essential Services Commission.
Negotiated market contracts
If your business uses tens or hundreds of times more gas and electricity than a household, you can negotiate an individual energy contract with an energy retailer. Negotiating directly ensures your energy contract is tailored to your specific needs and considers your unique circumstances. This includes considering how and when your business uses energy as well as your location and how much it consumes, among other factors.
There are several ways you can negotiate a market contract to make sure you get a deal that suits you.
Direct negotiation with an energy provider
Direct negotiation with an energy provider is the most common way of buying energy. Your business can work with a retailer or distributor to discuss your contract.
Engage an energy broker
Getting the lowest energy price may be your top priority when renewing your energy contract. But the terms and conditions of supply are just as important, and an energy broker can help you.
There are good reasons for engaging an energy broker; they:
- understand the commercial energy business
- are independent
- monitor gas and electricity market prices to help you get the best energy deal.
A group of businesses can approach energy providers to negotiate the best deal. An industry association or one of the businesses will usually act as a leader. Group purchasing increases your negotiating power as you will buy bulk energy.
Power purchase agreement (PPA)
This is a delivery contract between a renewable energy developer or energy retailer and a buyer or group of buyers. It is a long-term commitment to buy energy. It helps finance renewable energy projects, such as wind or solar, while securing a reliable, affordable energy source for the buyer.
Page last updated: 11/05/23