NUS Consulting Group

Rate Analysis and Optimization

What are non-commodity costs?

As markets deregulated, most businesses concentrated their attention on managing the commodity price of energy. While the commodity price of energy is important, so are the various non-commodity costs included in an energy bill. In many markets, non-commodity costs can make up more than 50 per cent of a consumerโ€™s overall energy cost.

These non-commodity costs generally include transmission, distribution, capacity, system losses, and balancing charges, energy-related taxes, and sustainability-related levies. While different markets may use other names, these are the principal non-commodity costs.

Why review non-commodity costs?

Typically, non-commodity costs are based upon rates or tariffs developed by the market regulator, utility commission, or other governmental body. These rates, tariffs, taxes, and levies will have different structures, applicability, and exceptions. Generally, it is incumbent upon the consumer to identify the most cost-effective options based on the consumerโ€™s usage profile. Most businesses have neither the expertise nor resources to analyse their profiles and all of the available non-commodity alternatives, applicability or exceptions. To make matters more difficult, many non-commodity charges are modified on a regular basis.

How does NUS optimise these costs?

On a scheduled basis, NUS assesses a clientโ€™s facility profile and identifies alternative rates, tariffs, and other non-commodity options and exemptions. Where NUS identifies opportunities to reduce or eliminate one or more non-commodity cost items, it provides the client with a detailed report.

We apply the following analytical process when undertaking rate analysis and optimisation:

  1. Assess: identify site type and develop an annual profile
  2. Analyse: review non-commodity charges and levies applied to the siteโ€™s invoices
  3. Optimise: identify rate and tariff options or non-commodity charge relief opportunities
  4. Report: prepare a detailed report of findings and opportunities
  5. Implement: coordinate with the client and suppliers, utilities, or authorities to implement recommendations

Non-commodity savings directly improve a businessโ€™s financial performance. Additionally, non-commodity analysis provides businesses with critical budget insight into how an important component of their overall energy costs is changing and evolving.

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