Small businesses in New South Wales are set to save an average of $60 on their annual electricity bills, after a decision by the Australian Energy Regulator to force electricity distributors in NSW and the Australian Capital Territory to pass on savings to their customers.
It’s good news for small businesses which have been forced to cover escalating electricity prices over recent years. Small business owners in the ACT are expected to save an annual average of $29 on their electricity bills, while households in NSW and the ACT will save an average of $38 and $19, respectively.
The AER announced today it has issued placeholder determinations that will bring about lower electricity prices for the four electricity distributors that operate in NSW and the ACT: ActewAGL, Ausgrid, Endeavor Energy and Essential Energy.
The regulator, which is an arm of the Australian Competition and Consumer Commission, said the determinations, which will apply from 1 July 2014 to 30 June 2015, mean the four companies are required to pass on cost savings, generated from lower demand for electricity over the past five years, to end consumers.
A full determination of the revenue structure for the operators will be made in April 2015.
Each of the four energy companies had proposed changes for their 2014-2015 tariffs, ranging from a $2 cut for Endeavor Energy customers to a $37 increase for ActewAGL customers.
However, AER chairman Andrew Reeves said “because the demand for electricity has been less than expected, the New South Wales businesses over-estimated capital expenditure and subsequently underspent between 2009 and 2014”.
Executive director of the Council of Small Business Australia Peter Strong told SmartCompany while $60 does not seem like a large amount of money, the ruling is good news for small business as it means that electricity prices are not on the rise.
“Small business runs on confidence and this news is good for business confidence,” he said.
Strong said that electricity represents a relatively small cost to businesses, compared to costs like rent and wages, “but it is significant enough that business owners are going out of their way to reduce these costs”.