Tasmanian electricity price rises pushing small businesses to the brink


Updated

December 03, 2018 13:54:43

If your last electricity bill gave you a shock, spare a thought for Tasmanian business owners who are struggling to pay annual increases worth tens of thousands of dollars.

Key points:

  • Small to medium Tasmanian businesses have been hit with big power price rises
  • Many lack the capacity to pass on costs to consumers
  • Job losses are inevitable, an electricity industry expert says

John Dabner, the general manager of Tall Timbers, an accommodation and tourism business in Smithton, said his annual power bill jumped by about $50,000 in the past year to $150,000.

If the trend continues he said he will have no choice but to increase the price of accommodation and restaurant meals.

“I won’t cut staff unless demand diminishes but I will have to increase costs the cover the cost of electricity,” Mr Dabner said.

“Other properties will be doing exactly the same, as power increases costs have increased, so at the end of the day the consumer is the one that is paying.”

Derwent Valley dairy farmer David Jones does not have the option of increasing the cost of his product to ease the pain of power price hikes.

Mr Jones is expecting his annual electricity bill to increase by $30,000 to $100,000 next year and said it would be a very difficult cost to absorb.

“Unfortunately like all farmers we’re price takers, not makers and we can’t ring Fonterra tomorrow or whoever I may be supplying and say I’ve just had a 30 per cent increase in my power bill, can I have a 30 per cent increase in my milk price?” he said.

Mr Jones said power and irrigation are necessities so his only option will be to cut labour and feed costs.

“But you can only do that for so long,” he lamented.

Job losses inevitable to counter costs

Tasmanian Energy Consultant Marc White said it was a trend hurting all of Tasmania’s 500 medium-tier power users operating across thousands of sites.

Mr White said tariff pricing was only capped for businesses and residential users spending less than $40,000 a year on electricity.

Medium-tier power uses have to negotiate individual, complex contracts with energy retailers and they are affected by any volatility in the National Electricity Market.

“Some of these smaller operators wouldn’t understand that there’s prime opportunities to buy and lock in contracts and there’s other times that you would not lock in a contract,” Mr Dabner said.

“It’s very confusing.”

Mr White said even if business owners have timed the signing of a contract well, they cannot avoid paying higher prices forever.

He believes job losses are inevitable in some sectors.

“Particularly in businesses like aged care which can’t raise their prices or businesses that are competing in global markets that can’t raise their pricing, they seriously have to look at their staff as the next sort of controllable cost category,” Mr White said.

Government support not guaranteed

Power has become less affordable despite the State Government providing medium-tier power users with a 10 per cent rebate at a cost of $10 million per year.

Yet this rebate is only guaranteed until the end of this financial year, making it difficult for businesses to plan for the future.

They are anxiously waiting to find out how the State Government will continue to provide.

Some business owners said they have considered investing in renewable energy, but the cost is too great with continued uncertainty over a national energy plan at a federal level.

Mr Jones said businesses will be too scared to invest until there is a clear long-term national plan.

“Get a clear path that everyone knows that everyone’s going to continue to take, not for one year, but for five or 10 years so we can get some investment back in the sector,” he said.

A State Government spokesman said the continuation of the energy rebate scheme will be considered in the context of the 2019-2020 budget.

The Government is currently reviewing the way wholesale energy is priced in Tasmania to protect businesses and residents from volatility interstate.

The spokesman added that the Government will advocate for a national energy policy that is in the best interests of Tasmania at the next Council of Australian Governments meeting.

Topics:

electricity-energy-and-utilities,

small-business,

hobart-7000,

launceston-7250,

tas

First posted

December 03, 2018 07:15:44



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