Watts News - Big Business Edition - Dec 2017

GM's Message

Thanks for taking the time to read our business news update. Since our last Watts News, Simply Energy’s B2B Sales has started its journey on transforming itself towards becoming: your trusted energy partner providing simple, affordable solutions to enable you to feel more in control of your energy. In this respect, we have completed Net Promoter Score rating, to assist us in focusing on improving areas that you as our key customers have provided comment on. We are continuing our focus on this part of our business, by gathering feedback of the brokers and consultants that we work with in forming energy offers to customers.

We are now firmly on track with our new products which will provide you with smart ways to improve your energy efficiency and reduce cost. This includes using your actual data to audit your energy usage and propose energy savings (virtual energy audits), solar solutions for business and other initiatives. Mr Deke Faile, Business Development Manager, is specifically responsible for managing our new product suite with my oversight. During the first quarter of calendar year 2018, we will be embarking on a road show to introduce you to our portfolio of products and to receive your market feedback too.

Power of Choice comes into effect this December, and as part of this, Simply Energy is upgrading its billing system. The upgrade includes a new customer energy portal, which will be available mid-December. The energy portal will allow you to easily review bills, consumption patterns and download some key information. We will be writing to you separately on how to access this.

Energy and its cost are very topical, our team of account managers are happy work with you on your needs.

Power of Choice

Substantial reforms are under way to the National Electricity Market (NEM), taking effect from 1st December 2017, following recommendations by the Australian Energy Market Commission’s Power of Choice review: www.aemc.gov.au.

The reforms provide opportunities for consumers to make informed choices about the way they use electricity based on the benefits that some services provide. A significant wave of change is taking effect from 1 December, 2017 and as such, a new market participant, “Metering Coordinator” (MC), has been introduced to enable innovative products to be offered to consumers. No immediate action is required from you, however for consumers to take advantage of the changes, you have the “power of choice” by nominating your own MC ”, especially if you have a direct metering agreement. . If you do not have a preferred MC to be nominated, we will appoint one for you as a part of our obligation. We will be sending you further details about any potential impacts and actions required.

Power of Choice Highlights:

  • Improve consumers’ understanding of cost-reflective network tariffs and to provide consumers more opportunity to be rewarded for changing their consumption patterns.
  • Expand competition in metering and related services to all consumers.
  • Provide consumers with better access to their electricity consumption data.
  • Implementation of a framework for open access and common communication standards to support contestability in demand-side participation end user services enabled by smart meters. This will support consumer choice.

www.aemc.gov.au At Simply Energy, our systems are being re-accredited by AEMO so we can continue to provide our services and enable you to take advantage of the reforms efficiently and effectively.

What’s happening in the energy market?

Australia’s National Electricity Market is dynamic, fully merchant and fast changing – 2017 has seen extremes in volatility due to a number of factors coinciding within similar timeframes.

Some recent influences on NEM spot and forward prices include:

  • The increased risk to energy security following the closure of the Hazelwood (VIC) and Northern (SA) brown coal power stations was recently underscored by an update to AEMO’s 2017 ESOO (Electricity Statement of Opportunities). AEMO indicated a heightened risk of supply shortfalls over the next 10 years, potentially resulting in the current NEM reliability standard not being met. In response, the Turnbull Government urged AGL to consider keeping the ageing Liddell (NSW) black coal power station open beyond 2022 despite detracting environmental and financial drivers.
  • There has been a downward shift in spot outcomes observed in Queensland over recent months. In mid-2017, the government released the ‘Powering Queensland Plan’ which saw an announcement to bring back the Swanbank E gas-fired power station to operation in early-2018, complemented by an edict to Stanwell to place downward pressure on wholesale prices by altering its bidding practices.
  • Gas prices over the 2017 winter period did not experience the spike observed in 2016. From a demand perspective, this was the result of a mild winter. However, the Federal Government’s threat to impose export restrictions on LNG operations continues to be present and represents a real threat of intervention.
  • Late-September saw the commencement of talks between Australian exporters and Japanese utilities regarding the benchmark sale price of thermal coal for the Oct 17 – Sept 2018 period. According to reports, an offer price of between $100-$110/mt FOB Newcastle was initially provided, higher than the $94.75/mt agreed from last year. NSW generators have pointed to a tighter coal market pushing their marginal cost of production higher. This has flowed through to their recent bidding practices, which has seen marginal volume priced slightly below gas-fired generation bid bands, thereby supporting spot price outcomes. The higher starting negotiated coal benchmark price may indicate the tightness is set to continue for the foreseeable future, potentially meaning power outcomes will remain elevated.
  • In mid-October, the Turnbull Government announced that it had scrapped the Clean Energy Target in favour of a ‘National Energy Guarantee’, which will be imposed upon retailers and incrementally introduced over 2019/2020. The National Energy Guarantee (NEG) comprises of two parts: a reliability guarantee requires retailers to meet their load with a mix of contracts or physical assets that include a minimum amount of dispatchable capacity, and an emissions guarantee set at a level which will enable Australia to meet its 2030 Paris Accord commitments. In order to meet these requirements, retailers would be expected to either: (1) invest directly in dispatchable and/or renewable generation capacity, or (2) enter contracts with appropriate generators to either increase the ‘dispatchability’ of their portfolio, or decrease their average emissions on a weighted portfolio basis. At current, it is unclear if the Labor Opposition party will support the policy, with a number of MPs citing a lack of modelling and policy detail, compounded by no forthcoming guarantees of price reductions for end users.

Wholesale price movements:

  • Following the unprecedented rise in Victorian and South Australian forwards contracts from mid-2016 to the end of Q1-2017, contracts have traded slightly lower with domestic gas prices easing somewhat, in addition to a strong increase in committed renewable energy build.
  • Queensland saw a sharp drop across all forwards contracts in June, following the Queensland government’s edict to Stanwell to depress spot outcomes. NSW contracts, being a net importer of energy, also fell as a result.

  • Backwardation remains in the curve for all regions (i.e. Cal20 < Cal19 < Cal18) largely driven by the expectation of future renewable build over the 2018-2021 period, to meet the RET.
  • Note that in the charts below, the series ‘Spot’ refers to historical spot observations (average daily prices). The forward contracts series (i.e. Cal-18, Cal-19 and Cal-20) provide a view of where energy to be delivered/consumed over a future period have traded historically – these are based on liquid contracts traded on the ASX.
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Virtual Energy Assessments

Simply Energy’s virtual energy audits make it easier for customers to access big data as a smart way of managing how energy is consumed and finding solutions over the noise of day-today business.

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Simply Energy is pleased to confirm that it is able to bring one of ENGIE’s digital data analytic solutions, specific to business energy users to Australia: ECOVA’s virtual energy assessments.

Simply Energy will leverage ECOVA’s deep expertise and innovative technology in building analytics to drive energy savings and engagement for commercial and industrial customers, both through utilities and directly. ECOVA analyses meter data and available building information to rapidly create building energy models that accurately identify energy efficiency and demand savings opportunities at an unmatched speed and scale.

The solution is non-invasive and provides customers with a smart way of considering options for reducing energy consumption and making cost savings. In an Australian first, Simply Energy will match the recommended energy savings from the virtual energy assessments with real product solutions for customers to purchase.

Please contact your account manager if you are interested in understanding more about Simply Energy’s Virtual Energy Assessments.

BRAVO RBILL Billing Engine Upgrade

Simply Energy is upgrading its billing engine to meet Power of Choice obligations and to make it easy for our customers to understand their energy usage.

Simply Energy is upgrading and transitioning its billing engine to BRAVO RBILL, a BRAVE Energy Systems technologies platform, as part of its obligations under Power of Choice and to provide an easier means for customers to access and understand their energy usage and costs.

The project has been a significant undertaking for both Simply Energy and BRAVE, with a combined project team being formed to ensure compliance with Power of Choice, high quality customer outcomes and seamless implementation of BRAVO RBILL.

The new BRAVO RBILL platform will include a new customer friendly energy portal, which will replace Simply Energy’s current Servo portal. Simply Energy’s Customer Care team will provide details to our customers on how to access and use the Energy Portal, to access bills, consumption data and other items. The Energy Portal will be available during December.

Throughout 2018, BRAVE will also deliver to Simply Energy a series of enhancements to BRAVO RBILL, which will further improve access to information and make it easier for customers to understand how they are using energy.

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Figure 1: BRAVO RBILL Energy Portal example.