Are electricity prices really biting small businesses?

28th February, 2017

According to government modelling, electricity prices for small businesses are rising faster than they can cope.

The government says that rates have doubled against 2007 levels.

It said that an average mid-sized restaurant in the Sydney CBD can expect to pay $16,544 for electricity this year against $8031 in 2007.

A café in Queanbeyan can expect to pay $5385 this year against $2614 a decade ago, while the Courier Mail reports that a Fortitude Valley mid-sized restaurant can expect a bill of $18,406 against $9104 a decade ago.

The government’s comments on energy prices and reliability began after recent outages on the eastern seaboard, notably in South Australia.

“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,” Federal Energy Minster Josh Frydenberg said to the press.

It also comes as liquefied natural gas (LNG) exports continue on the Queensland coast, which has all sorts of implications for electricity prices.

What’s unclear, however, is whether energy prices are a concern for small business owners themselves.

Rising up the charts?

Twice a year, MYOB’s Business Monitor asks SME business owners what their concerns are.

We select questions based on the feedback we get from small businesses every day. Finding out what pressures they’re facing helps us create tech tools to help them succeed.

In the latest Business Monitor, attracting new business ranked as the highest pain point at 27 percent, with cash flow not far behind at 26 percent.

The top energy-related concern was fuel prices, with 23 percent of small business respondents saying that they were feeling the pain at the fuel pump.

Fuel prices were listed as more of a concern for transport, postal, warehousing and agribusinesses.

Energy prices has not been included in the past, but with renewed talk focus is squarely on the issue.

Among other small business advocates, the price of electricity doesn’t seem to be a huge issue when compared to other pain points felt. More typically discussion around energy inputs are framed around bigger, trade-exposed businesses.

For example, the Council of Small Business Australia refers to infrastructure reliability (such as electricity), but none to price as part of its policy advocacy platform.

Meanwhile, the ACCI told The Pulse that while there were no comprehensive numbers on whether energy prices were climbing the list of SME pain points, there was an increase in small enterprises feeling the pinch of the power crunch.

Are you affected?

The price of running a business will always be a pain point for businesses. We’re interested in understanding how it ranks against other pressures of running a business.

Are you worried more about the rising cost of electricity or the fact you’re having trouble balancing the books?

If you’re feeling the pinch of electricity prices we’d love to hear about it.

Get in touch by commenting below or heading to our Facebook page