Energy prices are on the rise, at least with most energy retailers.
“Discounts are made up. Totally invented. There’s a retailer in the market with a 37% discount and another with a 25% discount. The 25% discount would actually lead to a cheaper bill… we aren’t playing those games, so our price is the price. And it will never go up for profit.”
Energy Locals seems to be an energy company with a difference. The company promises that it will never increase prices purely for profit. It also sends 50% of all profits to community and charity partners and has recently launched a new product, 100% Renew, that sends 100% of profits towards new local renewable energy products.
With energy prices rising, it all sounds a little too good to be true. finder.com.au spoke with Energy Locals director Adrian Merrick to find out what’s going on, where the profits are going and whether he might have found a better solution to rising energy prices than re-nationalising the energy grid.
“It’s [energy] an essential service and given the size of price increases over recent years, there are somewhat understandably debates over whether it should be re-nationalised. We don’t think that’s a good use of taxpayers’ money and are making it fairer, cheaper and cleaner on our own. We don’t need to wait for government policy to fix this. We’re just getting on with it.”
Cost by energy use vs flat, fixed fees
Merrick highlighted the point that there’s no incentive for existing energy providers to actually help promote green energy. In fact, according to Merrick, the growth of home and business solar systems, the increased use of energy-efficient appliances and the increased awareness in consumers of the need to save energy are actually driving prices up.
This is because other energy companies base price on usage. An overall decline in energy use means the power companies are raising prices across the board, “hence derisory feed-in tariffs for solar customers and steady increases in margins per unit to offset declining usage.”
Energy Locals gets ahead of the game by charging only flat fees. It has no incentive to sneak up prices or take away discounts, letting customers do well by doing good.
“We estimate that most customers will save money with Energy Locals. Over time, the savings will continue to grow due to our unique promise to never increase our prices for profit. Solar customers get a great feed-in tariff too.”
The Energy Locals business model can thrive by actually promoting renewables around Australia, which makes giving up profits a more sensible choice.
Where do the profits go?
“Half our profits go to our community and charity partners or into new, local renewable energy. We’ve also launched a new product, 100% Renew, that puts 100% of its profits into new, local renewable energy projects.”
To make more of a difference beyond simply making donations, Merrick uses the expertise found in the private energy company to add a mutually beneficial entrepreneurial twist to the program.
“We provide a way for communities to sell their locally-produced energy to the community. By doing this, more projects will get up and running and more of the energy bill will stay local instead of disappearing to distant shareholders… By providing a shared service to many communities, we can save them from the cost and risk associated with trying to build and run everything themselves.”
Energy Locals has also partnered with other causes, such as the Westmead Children’s Hospital, Surf Life Saving New South Wales, the Australian Cervical Cancer Foundation and many more. It has also joined forces with wide-reaching community groups such as Ronald McDonald House and Bicycle NSW.
When people sign up with Energy Locals, they can largely choose where the profits from their membership goes. According to Merrick, there’s a good chance you can get cheaper energy by signing up with Energy Locals. It might be worth pulling out your most recent energy bill and comparing it to the flat fees you’ll get with Energy Locals.
Q’s and A’s
What was the motivation to start Energy Locals?
"I’ve been a frustrated entrepreneur since I first set foot in a corporate office and decided it was time to take the risk and go for it. I also wanted to do something that I can be proud of when my kids ask what I did at work today."
How long until Energy Locals is available all around Australia?
“We’re already helping customers in Queensland and NSW. Other states will follow this year, including Victoria and South Australia. As well as making grid energy fairer and more transparent, we’re going to apply the same principles to solar soon too.”
What should consumers know about the energy business from someone on the inside?
"Discounts are made up. Totally invented. There’s a retailer in the market with a 37% discount and another with a 25% discount. The 25% discount would actually lead to a cheaper bill. I love transparency and we aren’t playing those games, so our price is the price. And it will never go up for profit. Given we only retain a small fixed fee for providing this service, we have no incentive to sneak up prices or remove discounts. Customers deserve to be treated with respect."
Can you explain why all profits are being given up, and what specifically it’s going towards?
"Half our profits go to our community and charity partners or into new, local renewable energy. We’ve also launched a new product, 100% Renew, that puts 100% of its profits into new, local renewable energy projects. We’re looking for great projects for those funds: solar for schools for example. Why are we doing this? Because we believe in what we’re doing and want to demonstrate our support for cleaner, cheaper and fairer energy with tangible action."