Massive electricity cost blow-out hits WA small businesses

Massive electricity cost blow-out hits WA small businesses

Peter West's business headquarters amounts to little more than a storage unit he sometimes makes a cup of tea in, which is why he was surprised to learn of a $400 increase in his electricity bill this financial year.

Tensile Canopy Systems is Mr West's 'one man band' business that designed and installed fabric canopies.

Small businesses are up for a shock in their power bills this year.

Small businesses are up for a shock in their power bills this year. Credit:Gabriele Charotte

Most days he is on the road and uses his commercial unit to store materials but because he uses so little electricity his power bill will end up costing about $400 more than last financial year.

In the last budget, the state government introduced a 236 per cent increase in the supply charge portion of Synergy's L1 tariff for small businesses. The increase was applied from July 1 and equated to a jump from 51 cents a day to $1.71 a day.


The electricity usage charge rate was reduced from 30.3 cents per unit to 24.3 cents. This meant the more electricity a business used the more money they could save on their bill compared to last year, potentially negating the increased supply charge.

Mr West used a tiny 183 units last year, which meant he didn't use enough power to negate the supply charge increase and would have to wear most of the cost.

"The building isn’t being used very much, its mostly for storage. We rarely leave the lights on, we have a computer plugged in and that's about all," he said.

"Maybe the kettle gets boiled once or twice a week ... because we don't use much power we've been stung by this.

"The average customer is actually saving, because they put the power cost down. I feel like I'm subsidising them."

Mr West's business was not alone.

Electricity bills for more than 20,500 small businesses have jumped at least 40 per cent, according to the WA Liberals.

Opposition treasury spokesman Dean Nalder released figures showing customers who used five units or less of electricity a day had annual bills jump on average from $723 a year to $1012.

Mr Nalder said low users were adversely impacted by the way the government increased the fixed component of electricity bills.

"I just don't think there's been due consideration given to adverse impact it has on the small energy users," he said.

"It becomes such an impost on these small businesses.

"They hadn't necessarily considered this cost, they hadn't necessarily budgeted for it, they weren't aware that the government was planning such a large increase."

Mr West said that while $400 might not seem like much, to small business owners who pour their life savings into their business, every dollar counted.

"At the moment my annual income is about $50,000...this does affect me, it comes straight out of my pocket," he said.

"They should have left a subsidy or something for small businesses who won't feel the benefit of the lower usage charges."

Mr Nalder said it was time the state government started owning responsibility for cost of living increases rather than pointing the finger at previous Liberal governments.

He said the former government had increased electricity charges during its first term when wages growth was strong.

"If they're whinging about that, they're actually compounding it," Mr Nalder said.

He said the latest round of increases had come at a time when wage growth had been restrained and when inflation had been running at about 1 per cent.

"When you put up household charges by 13 per cent, it's 13 times the rate of inflation and that's where the difference is," he said.

"If you see the reports coming out from ABS about savings rates in Australia, it's at around 1 per cent.

"So we're really chewing into people's discretionary income and when you see that and when you see fuel prices having gone up and these sorts of things, households are really hurting and households really have to tighten up."

Treasurer and Energy Minister Ben Wyatt said the decision to increase the supply charge was not taken lightly and the average bill would be reduced by 5.6 per cent.

"It was also part of a process of ‘rebalancing’ tariffs," he said.

"These tariffs were rebalanced to achieve a price structure that will incentivise efficient use of electricity and result in fairer sharing of costs.

"Currently, Western Power’s fixed charge for providing the electricity grid connection makes up about half of Synergy’s costs of supplying electricity to a small business premises.

"The rebalancing of the tariff aligns the daily supply charge with these grid costs, so that electricity bills will now more closely reflect the true cost of being connected to grid.

"While increasing fees and charges is a difficult decision, the 2018‑19 Budget was intended to balance the requirements of budget repair against the impact on households and businesses."

Mr Wyatt said the cost of providing services such as electricity, water and public transport continued to increase and that had to be met directly or indirectly through subsidies funded by the state.

"But the dilemma can be put simply, had Mr Nalder and the rest of the Liberals and Nationals not destroyed the state’s finances when in government, then such decisions would not have needed to be made so urgently," he said.

Chamber of Commerce and Industry WA chief economist Rick Newnham said they had long supported tariff reforms so prices reflected the true cost of supplying electricity.

He called for more competition to drive down prices.

“Ongoing subsidies have contributed to high state debt and held back reforms to enhance competition in the electricity market,” he said.

“Rather than subsidies, the focus should be on reforms that attract private sector investment and support greater competition in the electricity sector, which will put downward pressure on costs over the long term.”

Hamish Hastie is WAtoday's business reporter.

Nathan is WAtoday's political reporter.

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