Energy is a complex category, yet too often large multisite businesses and their staff are busy managing many commodities at once. This can make it difficult to gain the subject matter expertise needed to understand each commodity in detail. But if you do, it will ensure you are in the driver’s seat to drive the best prices for electricity and lower your overheads.
Demystifying the Australian energy re-contracting gorgon like ‘DMA’s – Direct Meter Agreements’ will ensure you are better placed to make educated, informed decisions, and as you are likely to be heading into ‘re-contracting season’ soon, this will increase your chances to drive your Australian electricity costs down.
What is a Direct Metering agreement (DMA) for electricity customers?
A direct metering arrangement is an agreement where Electricity customers can contract directly with a metering services provider.
If you don’t have one of these agreements in place, it just means that your retailer will manage this directly with the metering services provider. And unfortunately, you may incur higher premiums as the retailer is likely to pass through the DMA handling fee, which adds extra costs overall.
But this is excellent news for all those who do not have a Direct Metering Arrangement. You may be able to cut out the middle-man and pocket the DMA handling fee, and these savings can be very advantageous to your bottom line. Australia, Electricity Metering services are contestable in most states. This also means that you can select a great supplier offering a competitive deal.
What might I be able to save?
Our records show that large Australian sites without a Direct Metering Agreement (DMA) are generally charged metering fees of $850 to $1350 for a low voltage meter (usually a three-year term). These are typically passed through by a retailer, so you may not always notice these charges.
If you could reduce this cost to $450 to $550 per meter, even if you can reduce these fees for 100 sites, this would be a $30,000 annual saving worst case. Imagine if you are managing thousands of sites, these savings can quickly amount to many thousands of dollars.
Some retailers do pass on the DMA surcharge for the cost of managing it as part of their standard process. This varies between $0 to $300 per meter.
What is DMA contracting best practice?
It is always best practice to negotiate a DMA contract 60 to 90 days before the customer’s current contract expiry cycle. Allowing adequate time ensures customers have time to review the terms and conditions and approvals required.
The contract terms for DMAs are generally higher (usually three years and more) when compared to Energy contracts, which start at a 1-year term. Additionally, the provider’s (non-incumbent) policies on revisit fees, switching processes (if there will be any power interruption) need to be understood clearly by the customer.
If you are you looking to appoint a great Metering Services provider?
We recommend you ask them the following questions:
- Can you provide daily feeds in a standard format (NEM 12) to any email address?
- Do you have a portal where I can access my data?
- Are you able to reduce business disruption by offering meter installs after hours?
- Can you offer price flexibility if you have meter access issues for your first visit?
Why do the answers matter?
- If you can’t access your data quickly, you probably missing out on great opportunities.
- If you can’t readily access your meter data, it may take you weeks to get ready to go-to-market to tender your electricity supply (particularly for large sites).
- And unfortunately, as the market fluctuates, delays like this are likely to mean that you may miss an excellent opportunity to save.
- For sites with considerably high usage, Retailers will need clean and validated meter data set. Without it, they will find it challenging to apply the best possible premiums, as they will need to be more risk-averse because they can’t be sure of your usage and load shape.
- Suppose the retailer can visually monitor and review your usage patterns. In that case, they will better understand your usage profiles, leverage any insights, and provide you with the best possible price.