by Jonathan Gardiner | Feb 22, 2016 | Waste
Businesses need to get the best possible pricing and contract terms for utilities such as water, power and rubbish collection.
But once costs are minimised, improved utilisation becomes critical to extracting greater value. A formal, independent audit process is the best way of identifying quick wins.
Why perform an audit now?
In the past two years the waste services marketplace has experienced aggressive price-cutting by major suppliers. Now they are differentiating themselves with srvice offerings, and their customers need to understand how.
In recent months two vertically integrated suppliers have signalled their intention to emphasise value-added recycling and waste minimisation processes over price-cutting, going forward. Other suppliers of waste services that don’t possess their own landfills are using waste audit services as a point of difference, to avoid getting dragged into a price-cutting battle they will struggle to win.
The most efficient money-savers
Business customers will save more money by sending less waste to the rubbish dump (landfill) than they will from a reduction in the price of waste services.
From a supplier’s standpoint, waste audits are costly, requiring staff time and data analysis, with capital outlays often the consequence of the resulting recommendations. Waste audits are also self-defeating for those in the business of collecting and burying rubbish.
As we have been working with businesses to reduce their waste quantities and bin movements, as well as negotiate new commercial contracts on their behalf, we have observed the following potential pitfalls:
Staff training: New waste-handling process may require either specialised staff training or socialising of new ideas. This entails additional cost, and the purported benefits may be predicated on unrealistic assumptions.
Staff buy-in: Change needs to be adopted from the top down, however, if staff aren’t on board with a new process, you could be charged for specialist one-off disposal of spoiled recyclables should waste not be accurately sorted. It is thus important to ascertain the time pressures on your staff before a new initiative is accepted.
Hospitality customers are a happy hunting ground for waste diversion suggestions given that their raw materials often come in recyclable packaging, and food waste streams result. However, this industry is fundamentally deadline-focussed, and staff are less likely to worry about what goes in a particular bin when there are orders backing up. A suggestion to save money on waste may thus end up costing you more in staff time.
Spread the message and keep it current: Ensure you spread the waste diversion message beyond a small number of staff. This has cropped up in the education sector where a particular year/age group might push hard for an improved process, but the next year is more apathetic. A few years later a similar set of failed initiatives will be suggested by an enthusiastic set of newcomers, unaware of what was previously attempted.
Audit waste expenditure
Challenge current processes and the underpinning assumptions with an audit review process. The terms and conditions of certain supply agreements prohibit your engaging competing waste service suppliers for such reviews. This serves the interests of your incumbent supplier, whilst limiting the breadth of ideas and potential technologies available.
The Commerce Commission moved in 2015 to limit unfair contract terms, which cause an imbalance in parties’ rights in consumer contracts. Although the intention is to focus on the non-commercial sector, energy retailers have begun rolling out more end-user friendly terms to business customers.
It is our hope that the relevant waste industry participants will adopt a similar position to allow for a greater spread of waste minimisation ideas.
Waste diversion reduces cost
Other than the obvious desire to limit landfill refuse, to extend the life of these expensive assets and minimise resource wastage, there are currently obvious financial pay offs in diverting waste. These are likely to grow in future, either with a change of Government, or with a change in Government focus.
A waste levy of $10 per tonne is already in place to help reduce the amount of waste New Zealanders generate, but the levy is set at a level 10 times below that of some of New Zealand’s regular trading partners. In addition, the Emissions Trading Scheme covers methane emitted from landfills, but only for every second tonne at present.
Energy-savings initiatives by business are hampered by relatively low energy-pricing, and the same sort of thinking will undoubtedly apply with regard to waste services. However, given the current level of these charges vis-à-vis our international trading partners, we recommend business remediates as much as possible now rather than face higher costs in the future.
With the components of your waste services charges unlikely to fall any lower, diverting waste from landfill such as with increased recycling, is the best way to unlock additional savings and insulate your business from potential cost blowouts in future.
Jonathan Gardiner is a Director of Total Utilities.
by RichardGardiner | May 6, 2015 | Energy, ICT, Waste
The recent Commerce Commission ‘ruling’ on Unfair Contract Terms for utilities is great news for businesses.
Total Utilities has been negotiating utility agreements since 1999 and a recurring bugbear for us in the past 16 years has been the use of automatic contract roll-over and right of renewal/price-matching provisions by some suppliers to constrain effective competition.
Put bluntly, these clauses have been used as a ‘hospital pass’ by the suppliers in question to avoid a level competitor playing field – especially in the waste services/recyclables and natural gas markets.
As of 16 March 2015, the applicable new agreements must not include such clauses (i.e. Unfair Contract Terms).
It must be emphasised however that these contract clauses are still allowed if existing supply/service agreements are renewed for a further term.
The implications of this are very clear, businesses should negotiate brand new agreements covering the utilities etc in question – don’t just roll your existing agreement on the basis of unchanged contract terms and conditions.
Reference should be made to the Commerce Commission website for full details of their ruling. A PDF of the ruling can be downloaded here.
by Jonathan Gardiner | Dec 2, 2014 | Waste
Earlier this year Tamaki College’s executive officer, Neil McEnteer had no hesitation in handing over the school’s waste contract to Total Utilities for review. Since his first dealings with the utilities experts in 2012, Neil had seen the college benefit from significant savings across electricity, gas and telecoms bills. He remembers being quietly confident of another good result.
“In a sector where budgets are very tight, it is important keep costs to a minimum,” said Neil. “Every dollar we save is a dollar more we can spend on teaching and learning.
“Unless you are proactive, completely up to date with market information and have read all the fine print, it’s difficult to be sure that you’ve secured the best utilities contracts. Working with Total Utilities has shown us just what can be achieved when you bring in the experts.”
In 2012 Total Utilities cut the college spend on electricity by 12% and then by a further 13% through an early renegotiation in 2014. Acting on their advice, Neil moved the college’s gas supply contract to a new retailer in 2012, reducing annual costs by 13%. To complete the trifecta, Total Utilities renegotiated the school’s telecoms contract at the beginning of 2014, resulting in an overall saving of 29%.
“While we were discussing one of the other contract renewals, I asked for advice on our waste spend. Without realising it, we had allowed our contract to automatically roll over for two consecutive three-year terms. Jonathan Gardiner from Total Utilities took one look at the figures and said we could do way better on the price.”
Waste contracts almost always require 90 days’ notice prior to the renewal date if the customer wants to review pricing. If this opportunity passes, the pricing and contract terms automatically roll over for another three years. (more…)
by Jonathan Gardiner | Dec 2, 2014 | Waste
Jonathan Gardiner shares some ways to save money on waste management at your organisation:
How full are your bins?
If bins are regularly being picked up half or two thirds full consider increasing the size of your bin to reduce the number of pick-ups and cut transport and tipping charges.
Are you paying for pick-ups you don’t need?
Going into the long summer holidays, make sure your pick-up regime reflects the drop in the amount of waste generated over the next two months. If your scheduled pick-ups remain unchanged, you’ll most likely be paying for empty bins to be emptied!
What’s in the bin?
Carry out an audit of your waste disposal process on site. Walk through what actually happens on the ground rather than looking at the process you have in place to deal with waste (practice rather than theory). Ask your waste company to supply a breakdown of the bin contents from a typical week and see if it all stacks up. This will give you some insight into whether you can reduce the amount of waste that ends up in the bin.
Keep an eye on price adjustment clauses
Check your contract fine print to see whether your waste company can pass on increased charges at short notice. If they can, make a note to renegotiate the small print at next time your contract comes up for renewal.
Review contract pricing
Make a note of your contract expiry date and count back 90 days. Make sure that you give written notice of your intention to review pricing well in advance of the 90 day cut off if you want to avoid your current pricing being locked in for another three years.
If your pricing hasn’t changed for one or more contract terms, you will almost certainly be able to make savings on waste. Have a look at how Tamaki College cut their waste bill by 44% this year.
If you’d like to see how much you can save, talk to Jonathan Gardiner at Total Utilities. Find out more about the waste services that Jonathan and the team can assist your organisation with.
by Jonathan Gardiner | Sep 23, 2013 | Waste
The way that Aucklanders pay for their waste water is set to change from June 2014. This will impact on the financial reality for many schools and businesses over the next four years.
Getting in and being proactive about these changes will allow organisations to manage their water budget better during the transitional period between now and June 2016, advised Jonathan Woodbridge Buys, Energy and Environment Technology Associate at Total Utilities.
Why are water tariffs changing?
The unification of Auckland brought together seven local councils and their water services, with many differing tariffs for water usage into one clear structure.
Auckland SuperCity water provider, WaterCare, has introduced a single clear fee structure for the whole of Auckland for regular water services. This four-tiered fee structure will consist of three parts: two are based on the measured volume of fresh water used and the assessed volume of waste water returned to treatment, and the third part is a service levy.
The charge for fresh water is a straightforward fixed fee across all four tariff plans. Usage will put into bands: low, moderate, high and industrial, based on the volume of water used. The cost per litre of waste water returned to treatment will vary according to usage volumes and an assessed portion is rebated.
How will waste water tariffs be calculated?
The waste water percentage calculation is more complex. Organisations in the North Shore and Waitakere are used to paying a high flat fee for water management and will have no historical assessment of the percentage of their water that ends up in the sewer. In these cases, WaterCare will audit water usage in order to establish the percentage waste water charge. (more…)
by RichardGardiner | Sep 3, 2012 | Energy, ICT, Waste
The TUMG Team
Marc Wendelborn looks at why negotiating new utilities contracts doesn’t have to be a painful process.
Negotiating supply contracts for electricity, natural gas, waste, and telecommunications is no fun. You have to do your homework, have meetings with potential suppliers, negotiate a mine-field of small print, and possibly still not get the best deal available.
This is where a utilities broker can be useful. A broker can provide unbiased, expert advice on the services and pricing across all suppliers, answering questions such as which retailer you should buy from, how to compare confusing contract offers and how to negotiate the right contract terms.
Analysts take your utilities needs to market through an Request For Proposal process and come back with a clear and concise range of contract options with the aim of minimising cost on a ‘like for like’ pricing analysis of all offers. They also look to benefit you tactically by advising and negotiating supply agreements that expire at the best time of the year.
For telecommunications, a utilities broker looks to find the best supplier to meet the current and future requirements of the business. Analysts should follow a transparent selection process with measureable criteria that takes into account reliability of service provider, reduced costs and any other specific business needs.
And for waste services, minimising costs and maximising the proportion of waste that is recycled are the markers of a good utilities broker.
We looked at four businesses using the services of utilities broker Total Utilities Management Group (TUMG) to see how well they’d been served by a broker.
The Textile Centre
The Textile Centre is home to some of the city’s high flying technology, public relations, advertising companies and other businesses. The commercial property business owns properties covering 27,000msq.
Chief Executive, John Morgan, used TUMG to investigate power savings.
“We felt that they would be able to get better market information than we could access on our own. We grew up with Mercury and Vector and felt TUMG would be able to research the whole market independently, rather than us spending time and energy going out and doing the job ourselves.”
“There were no issues around small print at all and the contracts were presented on a like for like basis. All the contracts came back with prices based on between three and five years’ supply. Four companies offered comparative quotes, one of which was dismissed pretty quickly, and our existing supplier actually won back the right to continue to supply the company.”
“We saved about $140,000.”
“The process was very smooth. It’s probably one of the best examples I’ve seen. It was done promptly and there was a visit here to me. We had to provide two or three months indicative billing so they could get the number of kilowatts that had been used and the money paid. Armed with that information they did their research, went out to the suppliers and they were back to me within a fortnight.”
Swimtastic
Swimtastic is a learn-to-swim school running structured lessons for pre-schoolers, school age children and adults in a purpose built facility in the Eastern suburbs of Auckland.
“We use a lot of gas and electricity,” says Swimtastic’s founder and director Mark Bone, “and we felt that a utilities broker could seek out the best deal for us, allowing our company to focus on its core operation.”
“The utilities broker talked me through all the contract small print, reducing any misunderstanding and focusing on the best deal.”
“The broker sought out and negotiated the best deal on our behalf. The process was smooth and hassle free. Savings have been significant. It was a fantastic experience.”
Mamaku Blueberries
Mamaku Blueberries grows about 30 tonnes of blueberries per year for wines, liqueurs, pure juices, jams, sauces, chocolates and real fruit ice cream in addition to offering farm and winery tours.
“We were looking to cut costs and thought we’d give TUMG a try,” says Harry Frost of Mamaku Blueberries.
“Their analyst came back to us with four options, showed us they compared and the savings each offered per year – the best was $4000 a year. That sounded like a fair bit to me.”
“He went through everything pretty carefully, the different situations, rules and regulations, the fine print, which was very helpful as it cut through the technical jargon.”
“Because we were so impressed, we were able to refer them onto other small businesses in the area like dairy farms and so on.”
Galvanising Services
Onehunga company Galvanising Services Ltd. applies molten zinc as a protective coating to industrial steel to prevent corrosion.
Manager Andrew Lonsdale Cooper says that prior to contacting TUMG he spent a lot of time messing around with different companies and getting the run around.
“TUMG came along and offered me a the chance to join a bulk tender that looked pretty good, because I could jump on board with a whole lot of other small manufacturers like ourselves and take advantage of some economies of scale.
“They negotiated gas and power contracts for us, and the best part was the convenience – it saved me a hell of a lot of time dealing with people in areas outside of my expertise.”
“The process was smooth. The contracts were presented to us in a report that made it easy for me to compare the various offers on the table. There were no problems with small print and ultimately it’s saved me thousands of dollars.”
“Overall, it’s a pretty efficient, effective, reasonable service to have.”
As published in NZ Business Magazine September, 2012
