Energy and Resources

Energy price hikes hurting small business cashflow as data suggests bills have doubled since 2007

Dominic Powell /

Modelling from the government’s energy subcommittee shows small businesses could be slammed with huge power bills this year as the contentious debate around energy prices rages on.

The Daily Telegraph reports data from the newly established Energy Committee reveals electricity prices have more than doubled since 2007.

A medium sized restaurant located in Sydney’s CBD paid around $8031 per year for electricity in 2007, but the government’s modelling suggests that same restaurant could pay as much as $16,544 in 2017, reports The Daily Telegraph.

Similarly, The Daily Telegraph reports a hairdressing salon in Sydney’s west could see costs increase from $2159 to $4881.

It’s not just Sydney businesses affected, with the modelling suggesting a café in the seat of Queanbeyan, south of Canberra, could see increases from $2614 in 2007 to $5385 in 2017.

The findings come from Prime Minister Malcolm Turnbull’s newly appointed cabinet subcommittee, which includes Minister for Environment and Energy Josh Frydenberg.

Minister Frydenberg told The Daily Telegraph that businesses were “feeling the pressure” over hikes in energy prices, and the government was taking steps to attempt to lower prices.

“Every business is feeling the pressure of higher electricity prices and every dollar they have to spend unnecessarily on their power bills leaves less money to reinvest in their business to create jobs,” Minister Frydenberg told The Daily Telegraph.

The rising price of energy in Australia has taken centre stage in recent weeks as both parties have attacked each other’s policies.

The Liberal coalition government continues to push for more support for coal-based power, while Labor wants to work towards 50% of Australia’s energy coming from renewable sources by 2030.

When contacted by SmartCompany, the Department of Environment and Energy provided the following table detailing power bills in NSW:

 

 

 

 

 

 

 

 

 

Carnell: Reliability and cost big issues for small business

Small business have also been swept up in the debate, and Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell told SmartCompany the discussion had fired up over the last few months.

“It wasn’t a point of discussion for a while, but all of a sudden over the last three or four months it’s really gotten top of mind,” Carnell says.

Carnell has been in South Australia over the past weeks, consulting business owners in the area over the biggest issues for them. Power costs and reliability were the biggest issues “by a country mile” Carnell says.

“One thing obviously on the mind of South Australian business owners is cost of power and reliability of power,” she says.

Carnell notes concerns over price hikes are similar around the country, saying it’s becoming a “bigger issue”.

“There’s been some not insignificant price hikes over the last 12 months or so, which has made it a major issues for a lot of small businesses,” Carnell says.

For a solution, Carnell believes the parties must overcome their differences and agree on policies.

“What needs to happen is a bipartisan national energy policy. There needs to be confidence in our power systems,” she says.

“Power needs to be reliable, and power prices need to be reliable. Small businesses expect power prices to increase, but they shouldn’t be tracking higher than inflation rates.”

Small businesses of all types are hit harder by energy cost increases, as they lack the ability to negotiate with power companies, Carnell believes.

“SMEs have less capacity to negotiate with power companies, where big businesses usually have room to negotiate,” she says.

Power outages can also cause significant cashflow issues for businesses, she says.

“A lot of SMEs in South Australia were insured, but we couldn’t find many who had been paid their insurance payouts from the first major outage,” she says.

“This can cause significant cashflow issues for small businesses.”

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Dominic Powell

Dominic is the features and profiles editor at SmartCompany. Email him at [email protected].

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