Small businesses continue to face increasing energy bills

Thursday 1 December, 2016

Queensland small businesses face increased electricity bills after measures aimed at cutting their costs were rejected.

The State Government’s six-month review of the Queensland Productivity Commission’s final report on electricity pricing addressed some issues – but not the major ones which would have helped small business.

The Chamber of Commerce and Industry Queensland (CCIQ) said the government’s response was disappointing given that energy costs for the business community have more than doubled over the past decade.

CCIQ Senior Policy Advisor Julia Mylne said businesses would continue to see double-digit price rises, as evidenced in the 2016-17 retail price determination.

“The purpose of the inquiry was for the QPC to provide options to improve outcomes for consumers,” she said.

“While the State Government has announced a support package to assist regional farming and irrigating businesses, the majority of small businesses will continue to be subject to rising electricity prices.”

Ms Mylne said the commission identified Queensland’s electricity price increases had largely been driven by escalating network costs, with the costs of the Solar Bonus Scheme (SBS) and the Australian Government’s Renewable Energy Target (RET) also playing a role.

The QPC draft report said more than $22 billion was spent on electricity network infrastructure between 2005–06 and 2014–15 to meet higher reliability standards and to accommodate increasing peak demand – which had led to concern there had been over-capitalisation of the network infrastructure.

In its submission to the commission, CCIQ asked it to consider the merits of revaluing the Regulated Asset Bases of the network businesses Energex and Ergon Energy to tackle areas of the network that are underutilised or unused.

CCIQ also recommended State Government consider ending the SBS earlier than 2028.

But, Ms Mylne said, both of these recommendations were not accepted by the government.

“Many small businesses are very reluctant to pass increases on to customers for fear of losing trade. Yet at the same time most businesses have already reduced their electricity usage as much as possible, forcing businesses to try and absorb price rises,” she said.

“This results in businesses reducing costs in other areas, including capital expenditure and employment levels that further damage the economy.

“There is little doubt that the impact of electricity price rises will push some businesses permanently into the red with forced closures.”

Ms Mylne said CCIQ is concerned the plight of small businesses is not being taken seriously.

“Small businesses have expressed that their views are not being considered and reflected in decision making in the energy sector. CCIQ urges the State Government to take immediate action to provide assistance to small businesses trying to manage these crippling costs.”

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