Keeping updated on the various charges that appear on your business’s electricity bill is crucial for business owners if you want to stay on top of your business energy. 

In 2022, the Australian energy market experienced interventions by market regulators, which resulted in compensation claims from electricity market participants for losses incurred during the administered pricing period. These compensation charges are reviewed and approved by the Australian Energy Market Commission (AEMC) and subsequently passed on to electricity retailers, like Next Business Energy, to recover from their customers. 

As a result, you may have seen a charge on your electricity bill called the “Generator Compensation Recovery Charge”.

It’s important to understand what these charges are, why you are being charged, how they are calculated, and how we can help you navigate through this process.

What is the “Generator Compensation Recovery Charge” on my invoice and why am I being charged?

In June 2022, the Australian Energy Market Operator (AEMO) suspended spot market prices in South Australia for several reasons, including ensuring sufficient electricity supply at a capped price set by AEMO. However, this suspension had an impact on electricity generators, as they may have been required to sell their electricity at a loss. 

As a result, generators are entitled to claim compensation from the energy market for these losses incurred during the suspension of the spot market. The AEMC assesses these compensation claims and determines the amount that should be paid to the generators.

The cost of this compensation, as directed by the AEMC, is then passed through to retailers like Next Business Energy, who in turn recover these charges from their customers. 

The “Generator Compensation Recovery Charge” on your invoice represents the portion of the compensation costs that energy retailers are passing through to you as a customer. This charge is separate from your normal electricity charges and costs paid for by retailers, and it appears as a separate line item on your electricity invoice.

How was this charge calculated?

Next Business Energy has reviewed the total compensation charged by the AEMO and has calculated the cost per Megawatt-hour (MWh). This cost is then passed on to customers based on their annual consumption in MWh. Customers with higher energy usage will be charged more, while customers with lower energy usage will be charged less.

Is this a one-off charge?

For this particular type of compensation charge, it has been applied as a single charge based on the compensation costs incurred in 2022. However, it’s important to note that retailers may pass through compensation charges at any time depending on unforeseen costs charged to us by the AEMO. 

Also, please note that compensation charge claims by generators are still being evaluated by the AEMC so further charges may be applied at a later date.

We understand that receiving unforeseen charges is not ideal for customers, and we have applied this charge in an effort to minimise the rate increase that may occur mid-year. However, if you are not on a “Next Assured” or “Next Reassured” plan, we may be able to offer you a new plan with lower rates as a possible resolution.

How can Next Business Energy help?

At Next Business Energy, we understand that changes in electricity market compensation charges may be confusing for our customers. We are committed to providing you with transparent and reliable information to help you understand these charges and their impact on your electricity bills. 

Our Customer Experience team is available to answer any questions you may have and provide assistance in navigating through this process. Additionally, if you are interested in exploring alternative plans or options to minimise the impact of these charges on your business, our team can work with you to find the best solution that aligns with your energy needs and budget.

Contact our Customer Experience team if you have any questions regarding the compensation charge.