Prepare for looming power price hikes

Over the last week I have spent some time in country NSW.  It’s so easy to get caught up in a myopic Sydney life and it was very enlightening to get out of the city for a while, and from a business point of view get a bit of a reality check.

Businesses are doing it tough in the country, and the impact of the newly announced electricity price hikes by IPART (the Independent Pricing and Regulatory Tribunal) this week will stretch many of them to the limit, and some past breaking point.

In the announcement, IPART Chairman Mr Rod Sims laments the pressure that this will place on families.  I agree that there’s no doubt households will struggle with increases of over $300 on their bills.  But I was surprised that the same concern wasn’t shown for business that are also set to suffer, after all, these small business are the local employer in the country!

Households and small businesses across NSW will see their electricity bills soar by an average of 17.3 percent.  This will add an extra $1000 onto an average small business bill of $6000. Where’s that going to come from?

Despite the change of government and the promises of reduced pressure on small business, things haven’t changed much at all.  Last year they were slugged with a 10 percent increase. This year it’s 17 percent. There’s speculation that if the carbon tax kicks in next year we could be looking at a further 25 percent increase – a whopping  $1,750 – pushing an average bill up to nearly $9,000.  Does the government realise what this will do to the ‘lifeblood’ of the Australian economy?  Despite the rhetoric, is there really a structure in place to protect the small business sector?  With policies like this coming in, I’m beginning to genuinely doubt it.

Contrary to popular opinion, the electricity retailers are as concerned about the bill increases as we are.  They don’t have a choice in the matter – the regulatory tribunal imposes the increases – and they know they will see a lot of customer churn as people seek better plans and better deals.  With some electricity retailers being sloth like in offering their customers a fair deal, there are others who will be ‘first in best dressed’.  Retailers are offering some great deals to soften the blow (discounts, cashback etc) as they know how hard this is going to hit.

The best advice I can give is to plan ahead.  If you know what’s coming it’s easier to start saving and make sure these bills don’t come as surprise.

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