Small tweaks = big savings
We've all heard the saying, "a penny saved is a penny earned", but in horticulture, where energy costs can significantly impact your bottom line, it's time to rethink this adage. In fact, a dollar saved on your energy bill can be as valuable as $20 earned (assuming a 5% EBIT or margin). This 1:20 ratio is a concept that might seem surprising at first, but once you dive into the details the aha! moment kicks in. A $1 saving requires minimal effort and has a direct positive impact on a business's bottom line or profit pie. To achieve the same result in earnings requires 20-fold more effort. This makes perfect sense, especially using the recent changes to electricity tariffs in Queensland as an example.
The reality is that whilst energy costs are fixed, your tariff and other terms can be negotiated.
Take Neil Rechlin, one of our expert negotiators from NextGen Group for example. Neil makes a habit of regularly checking his energy bills for errors (and finding them) and to renegotiate his energy costs.
His efforts consistently pay off, allowing him to highlight overcharges, secure better rates and reduce his overall expenses. Not all of us are like Neil, but after watching him in action over the last few months at the Geared Up Growers Negotiation Tactics Masterclasses – a lot of us should be more like Neil!
With the recent adjustments to electricity tariffs in Queensland, there's no better time to check your bill, and negotiate a better deal.
Take Tariff 22C for example. Last year Tariff 22C was a winner for those who were able to shift their power use away from the peak hours of 4pm-9pm. However, starting from July 1, 2024, these tariffs have seen some changes which may make this tariff extremely costly for growers if they don’t’ check their usage hours and the new increased rates.
Similarly, Tariff 20, which applies to small businesses, saw a significant increase in 2023–24, with annual bills rising by 26.8%. While there was a small decrease of 1.1% in 2024, it's clear that energy costs remain a major cost concern for businesses.
These increases put considerable pressure on the bottom line, particularly for businesses that rely heavily on electricity, such as those with large cool rooms or 24/7 operations. The good news - you can take action.
By regularly reviewing and renegotiating your energy bill, you can potentially save hundreds, if not thousands, of dollars each year. And if you need any motivation to get started – remember it’s much easier to save money than to make it. Let’s not be cost takers – let’s start this quarter with reviewing our energy bills – you might be surprised at how much you can save.
