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Energy prices continue to soar for small firms

Monday, 21 February 2011 | By Ryan Jon Dunn

Small businesses are set to be hit by escalating energy bills, with prices set to double in the period between 2008 and 2015, a report by Australian Industry Group (AIG) shows.


The report titled Energy shock: confronting higher prices, delivers a grim message for businesses, with the federal government’s renewable energy scheme expected to add a further $1.2 billion in electricity costs this year alone.


"It’s clear Australian businesses and households need to prepare for escalating electricity and gas prices over the next decade," AIG CEO Heather Ridout said in statement.


"Energy costs have risen substantially over the past five years, and there is no end in sight to these increases."


The survey comprising of 150 Australian companies, many of which are SMEs, found that more than half of business operators had no plans to improve efficiency within the next two years, many stating ‘it’s not currently a high priority’.


The report says Australian industries are already grappling with the challenges of a strong dollar and an economy nearing capacity.


The AIG says that efficiency has long been a focus for large companies in energy-intensive sectors, but the coming price rises will require many other businesses to focus on the issue too.


In what AIG says is a sobering message, 7% of the company’s surveyed said they believed their energy efficiency has gone backwards.


The AIG report welcomes the prospect of a carbon tax, but says that a carbon price would add up to $300 per year to annual energy bills, taking the potential 2013 household average from $1,700 to $2,000.


In recent years there has been a large push for renewable energy. However, it’s still a considerably small part of the industry, with the report finding that less than 1% of the NSW retail electricity was renewable in 2009-10. This is only tipped to grow to around the 2-3% mark by 2012-13.


When broken down into sectors, the manufacturing industry is the most affected by energy costs, as it accounts for around half of the $13 billion annual electricity spend by Australian businesses.