Small businesses face energy hardship

New research has found a third of Australian small businesses are experiencing energy hardship due to the Covid-19 pandemic, which has left one in five with an energy service debt.

The research project from the Council of Small Business Organisations Australia (COSBOA) surveyed 408 small business owners to investigate the impacts of energy policies and advocate for better energy consumer protections.

The project was funded by Energy Consumers Australia as part of its grants process for consumer advocacy projects and research projects for the benefit of consumers of electricity and natural gas.

The survey revealed businesses in New South Wales were significantly more likely to have suffered energy hardship despite longer lockdowns and border closures in neighbouring states.

Energy hardship was felt most profoundly by heavy energy operators and in businesses where electricity demands continued even if customers were hibernating or locked down.

Covid impacts continue to be felt

COSBOA CEO Alexis Boyd says the impact of Covid-induced energy hardship will be long-term following two years of pandemic conditions that kept many customers at home.

“Right now, small business owners across the country are grappling with how to pay down legacy bills leftover from Covid shutdowns and slowdowns,” Ms Boyd said.

The research also found:

  • 40% of small business owners reported being in a worse financial situation personally because of the impact of Covid on their business and their ability to pay essential bills such as energy.
  • A third of small business owners delayed paying their energy bills, leaving 1 in 5 owners with an energy service debt which they are still paying off.
  • Energy hardship was more acutely experienced by larger small businesses with more than 20 staff (41%), businesses operating with an embedded network or shopping centre (56%), newer small businesses (59%), and businesses struck by temporary closures (69%).

Energy Consumers Australia CEO Lynne Gallagher says the research demonstrates the need to set the right policy conditions to support small businesses to manage energy bills as they emerge from the pandemic, and other future economic shocks.

“The research clearly shows that flexibility to pay bills, proactive support and better communication from energy providers are all extremely helpful to supporting small business during difficult times like the Covid-19 pandemic,” she says.

Support needed

Commenting on rising energy costs faced by small businesses, National Retail Association CEO Dominique Lamb says business owners should be provided with supportive information and toolkits tailored to their business processes so they can make the most out of energy efficient capital processes.

“The NRA recommends implementing the COSBOA wish list designed to support small businesses through these rising prices,” she says, highlighting the rollout of business energy saver campaign material, to promote energy conscious habits among staff, and giving businesses access to an Energy Planning online training program to upskill their staff that handle procurement and process decisions.

“The more informed businesses are on how to manage their energy consumption, the easier it will be for them to manage costs,” she says

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