Businesses should review energy contracts before carbon tax hits, says Energy Action

Energy Action has urged businesses to review their energy contracts in preparation for the carbon tax.

The independent energy management company said that energy retailers are likely to process a carbon adjustment to clients’ bills by either increasing contract energy rates or introducing a new line item to bills. Most existing retail electricity contracts do not charge for carbon, but do contain clauses allowing for adjusted prices in response to the carbon tax.

“The overwhelming majority of energy users in Australia will experience an increase in energy costs after the introduction of a carbon price,” Energy Action CEO Val Duncan said.

“The only way to minimise the carbon tax is to emit less carbon in your operations. Understanding the cost exposure is crucial to understanding the investment businesses should be making now to reduce carbon footprint and energy expenditure.”

According to Energy Australia, price increases take some time to show on consumers’ bills, so increases due to the carbon tax “will get lost in the noise of other price increases embedded in customer’s energy bills”.

Ms Duncan said, “Due to the lag between energy consumption and bill delivery, business energy customers may just be coming to terms now with their increases from January 1, 2012 related to state and federal efficiency and renewable energy targets.”

Prior to the carbon tax being introduced in July 1, businesses can start preparing by making their business more energy efficient. Energy management companies can help businesses, Energy Australia said.

“Responding to the carbon tax will be a journey and a path of continuous improvement. Perhaps the most important step is to take the first step: do something - anything,” Ms Duncan suggested.

“Taking control of your energy contracts is an obvious starting point, it will give you some control over the numbers involved and in the current market, it may yield immediate cost savings too.”