Electricity bill typically forms 5% to 20% of business cost depending on the nature of operation. Business owners are constantly looking to maximise savings. However, there are a myriad of price plans offered in market that might feel a little overwhelming. So how do you choose the right plan for your business?
The most popular electricity price plans will fall into the following 2 types:
- Discount Off Tariff Plan (DOT)
- Fixed Price Plan
Discount Off Tariff Plan (DOT)
Image credit to EMA
The SP Services Tariff changes every quarter in accordance with the underlying oil price movement. This is set using an established methodology. What you get is a certain guaranteed percentage to SP Tariff regardless whether it goes up or down for the quarter.
DOT is popular with SMEs and most businesses as they know they enjoy the guaranteed discount savings to SP Tariff benchmark that accounts for market adjustment. This also takes away the need to worry about locking into long term electricity contract, as you would naturally enjoy upside and downside of the price movements, with the added comfort of guaranteed discount.
Your electricity cost will be subject to the effects of rising and falling oil prices on a quarterly basis. This means there might be times you could be paying more than if had opted for the fixed price plan.
Fixed Price Plan
Image credit to EMA
As the name suggests, you pay the same electricity rate for entire duration of the contract.
By fixing the price, you can project your annual electricity budget with confidence. This will help improve your cash flow planning. Fixed Price Plan protects businesses from potential bill shocks due to the inherently volatile electricity market. Electricity prices are co-related to oil market which provide the raw material for power generation.
Fixing the rate means that you forgo the savings if the electricity market prices reduce during contract term. The next consideration is the tenor of your electricity contract. Fixing for a long tenor of 2 years or more, means that you may have locked onto a higher price, especially when the market prices drop, which reduces your cost edge compared your competitors.
iSwitch is here to help
Weather you choose DOT or Fixed, iSwitch is committed to provide you with rates to stretch your savings and a dedicated sales team to make your switch hassle free. As one of the leading electricity retailers in Singapore, we have a track record of serving more than 1,000 businesses enjoy significant savings on electricity.
Drop us a call at 6505 9963 or email us at email@example.com and we will be more than happy to help!
Keep in touch and join our mailing list to receive our monthly newsletter!