Small Business Sector Slugged By Rising Power Prices

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Author: PASA

There is mounting evidence that small businesses are bearing an unfair higher share of rising electricity prices.

Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, says submissions to the ACCC electricity pricing inquiry confirm anecdotal accounts that small businesses are being gouged.

Ms Carnell said while households in several states are grappling with price increases of 15-18 per cent, for most small businesses it’s above 20 per cent, with higher rises forecast next year.

“It’s totally unacceptable that energy-dependent small businesses like manufacturers and rural industries are being slugged more than householders and big business,” she said. “The energy system is broken and needs to be fixed, but we can’t afford to see businesses close and jobs lost while governments and energy companies get their act together.”

Ms Carnell cited examples from submissions to the ACCC inquiry including:

Printing Industries Association of Australia

Feedback from our members shows individual increases in electricity prices which include $20-30,000 a month; increases over the previous 12 months (or a comparable period) of 25%, 35%, 48%, 67%. One large-sized Melbourne-based print member will face an electricity bill increasing threefold (from $120k per annum to $360k) once its existing contract expires on 31 December 2017. Many of our members have incurred these increases despite decreasing the amount of electricity they use.

 

Alba Cheese Manufacturing (Melbourne)

All electricity retailers we have dealt with provide complex pricing arrangements which make it hard to make comparison between the various offers. In discussion with energy retailers they focus on the energy rate and blame energy suppliers for the cost increases, they gloss over their own charges and dismiss them as being “beyond their control”. Analysis of electricity charges over the last five years shows that network charges rose by an annual rate of 25.9% over the period whilst energy charges rose 21.3% per annum.

 

Ms Carnell said the submissions expressed small business concerns with lack of retail competition; complexity around price comparisons and billing; transparency, and disincentives to reduce consumption.

“I’m deeply concerned that small businesses appear to be victims of profiteering by electricity companies,” she said. “I welcome the NSW Business Chamber suggestion of an industry code to provide minimum standards for energy retailers.

“These standards could be designed to provide a common basis for comparisons between offers, a minimum length of time to consider retail offers and requirements for greater transparency with billing.”

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