QHA-Review_July_digital

Damian Steele
INDUSTRY ENGAGEMENT
ENERGY MATTERS
Energy continues to be a growing cost to all
Queenslanders and particularly to the hospitality
and hotel sector. For this article I have engaged the
expertise of long term QHA Partners, Trans Tasman
Energy Group (TTEG), who can assist members to
manage costs and identify new profit opportunities by
providing insights on how to:
• minimise energy charges through smart
practices including market timing, group
procurement, contract length selection, diligent
assessment of offers and never leaving your
contract renewal to the last minute
• minimise energy consumption through
onsite practices, monitoring equipment, voltage
optimisation and power factor correction
• effectively consider new energy initiatives
including solar, electric vehicles and batteries
• assess network (supply) charges from Ergon
and Energex — as demand patterns change, up to
1 in 15 sites are simply paying too much
• benefit from profit opportunities including
electricity on-selling to tenants and potentially
demand response if you have an on-site generator
or can shut down load
• prevent procurement disasters — TTEG can
provide insights to help you spot opportunistic
behaviour and to identify any rogues
• regard the electricity market’s operation, updates
on market conditions and pricing plus information
regarding any market wide regulated pricing
1 July price increase – small electricity customers
An example of regulated change is the recent
Queensland Competition Authority notification. From
1 July, small business customers will be charged an
extra 21.9% more in south-east Queensland (Energex
region) and a potentially an extra 26.1% more in
regional Queensland (Ergon region). Energy continues
to be a growing cost to all.
The increases will apply to customers billed via a single
bundled c/kWh rate. This includes bottle shops and
smaller hotels typically spending less than $25,000
p.a. The dollar amounts shown above appear to be for
low users of around 5 MWh p.a. As a bottle shop may
use 60 MWh p.a. the increases are potentially in the
range of $9,000 p.a. in south-east Queensland and
$6,000 p.a. in regional Queensland.
1 July price increase - large electricity customers
Larger hotels don’t escape a price review, but it will be
applied differently. Larger sites are typically billed via
an unbundled price with the energy, network (poles
and wires) and environmental charges billed by their
individual components to provide the total bill.
The Ergon and Energex network charge component as
approved by the Australian Energy Regulator (AER) will
also change from 1 July.
Ergon and Energex have multiple network tariffs, but
as a rough guide we predict a 6 to 8% increase on the
network charge component in south-east Queensland
and a 3% increase in regional Queensland.
Energy component
For larger sites, a major component of your bill is the
energy component. The Australian electricity market is
the most volatile in the world as the spot traded price
can move from $100/MWh (ie 10c/kWh) to $15,000/
MWh (ie 1500 c/kWh) in 30 minutes! This partly
explains why you have a short validity period when
looking at new contracts.
The chart below shows prices are currently being
traded to 2026. This means we can lock prices today
for any period to 2026. To take advantage of any future
lower prices, we suggest a procurement strategy in
place so you can lock in prices when they are low.
What can I do now?
• review your energy contracts, establish your end
date and have a procurement strategy in place
• for any electricity agreements expiring within
the next three years, be prepared to enter into
contracts from today
• take steps now that will help secure favourable
pricing and contract terms and ensure the financial
stability and smooth operations of your business
Should you require any assistance or guidance
regarding energy procurement strategy, the TTEG
team is available to support QHA members.
QHA REVIEW | 39