A Queensland supermarket owner has been left reeling by an “impossible” electricity price increase that would nearly quadruple his annual bill to $218,000.
A Queensland supermarket owner has been left reeling by an “impossible” electricity price increase that would nearly quadruple his annual bill from around $58,000 to $218,000.
Lewis “Kelly” Anderson told The Courier-Mail he was shell-shocked after AGL informed him of the looming increase for his IGA supermarket at Mapleton on the Sunshine Coast.
Mr Anderson said the staggering increase would mean 80 per cent of his business expenses would go to paying for power.
“We would find it very difficult, if not impossible to pay that,” he said, adding the family-owned business of 26 years had already installed as many solar panels as it could on the roof.
A copy of Mr Anderson’s electricity bill provided to news.com.au shows the peak energy charge rate for his premises is set to increase from 6.5453 to 25.5743 cents per kilowatt-hour when his 24-month contract period rolls over on November 1 – an increase of nearly 300 per cent.
The off-peak rate will rise from 4.4459 to 16.0345 cents per kilowatt-hour, a 260 per cent increase.
Mr Anderson told the newspaper AGL had informed him the price hike was “out of their control” and had blamed the war in Ukraine.
In a statement, an AGL spokesman said Australians “would have heard about the unprecedented situation impacting the wider energy market and this is no exception”.
“This sort of increase is not unique to AGL Energy, and other retailers will be informing their commercial and industrial customers of similar price changes,” he said.
“When commercial and industrial customers with high electricity use — such as supermarkets — come out of contract with their retailer, they are exposed to current market conditions including much higher wholesale costs and network charges, which are impacting all energy retailers and the wider market. This is very different to many smaller businesses who do not use this amount of electricity and are on standing or market offers.”
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He added, “While we don’t comment on specific customers, we are aware of the additional pressure the unprecedented energy market situation is placing on our commercial and industrial customers and we are actively working closely with them as they come out of their contracts to help them with their options.”
AGL’s position is that Mr Anderson contracted with AGL for two years in 2020 when wholesale and network energy costs were substantially lower than they are now.
The power company contends that his annual bill is set to increase from $58,000 a year to around $110,000 per annum, or just under double, not quadruple.
AGL says his business uses a high amount of energy – 390 megawatt-hours per year – and is therefore classified as a commercial and industrial customer. Smaller business customers who use less than 100 megawatt-hours per year operate on market contracts with prices set by AGL or energy regulators.
For example, small businesses on the regulated standing offer in Queensland will see an average increase of 13.4 per cent, following the decision by the Australian Energy Regulator.
Commercial and industrial customers contract on an individual basis with energy retailers, with prices set largely at market rates.
The Queensland Chamber of Commerce and Industry has called on the state government to urgently step in with a support package for businesses, warning the skyrocketing energy costs were a “critical concern” and not addressed in this week’s state budget.
“We know rebates have worked in the past as an appropriate mechanism to relieve power bill pressure, especially for small businesses,” CCIQ policy and advocacy manager Cherie Josephson said in a statement.
“For larger businesses however, which are likely to feel a more significant impact – some likely to see up to a 21.2 per cent increase on their electricity bills – CCIQ is keen to see longer-term solutions like sustainability business incentives and initiatives to help highlight power bill pressure now and in the future.”
Opposition energy spokesman Ted O’Brien has called on Prime Minister Anthony Albanese to take steps to deliver on Labor’s promise to cut power prices, warning thousands of small businesses risk collapse.
“Australia risks a run of business closures if the Labor government continues to do nothing about the short-term impacts of soaring power prices,” he said.
“Only last month Labor was promising to cut power bills and Australians expect nothing less than for them to deliver on this promise. A global energy crisis has hit our shores and it is up to the government of the day to manage the domestic fall out.”
Mr O’Brien claimed the Coalition was “managing these pressures up until a month ago and we were able to cut the average power bill for small businesses by 10 per cent over the last two years alone”.
“Labor came to office promising even further cuts, but prices are now going in the other direction,” he said.
“I am deeply concerned for small businesses across Australia that will soon be slugged with unaffordable increases to their power bills.”
Federal Energy Minister Chris Bowen warned over the weekend that Australians were in for a “bumpy winter” of spiraling energy costs, saying there was no “quick fix” to the crisis.
“I have said before it is going to be a bumpy winter,” he told Seven’s Sunrise on Sunday.
“The system is not fit for purpose. So we have got a short-term plan to keep the lights on and that has so far worked. Then, we have a long-term plan to get more investment into the system.”
Mr Bowen blamed “a decade of changing energy policies” and “not enough investment in energy storage and non-renewable energy”, and said the government would have to build “10,000 kilometers of transmission wire across this country”.
“That is not going to happen this year,” Mr Bowen said.
“We can start and we have started and we are starting but it is not going to happen immediately. What we can do is over the next few years get it built, get the pressure on energy prices through renewable energy, I think Australian understand that you don’t fix this in a day and we have never pretended we can.”
His comments came as Tennant Reed of the Australian Industry Group warned of looming price increases for households.
Mr Reed told Nine News the international competition for coal and gas would inevitably keep generation costs high domestically.
“We are currently in the frying pan and if we are lucky we will emerge into the slow cooker over the next couple of months,” he said.
“Over the next two years it’s likely that households will be paying 50 per cent more for their electricity and potentially double for their gas.”
Meanwhile, the Australian Energy Market Operator will lift its suspension of the National Electricity Market at 2pm on Friday.
The AEMO last week seized control of the market for the first time in history to stabilize power supplies and wart the threat of blackouts.
The chaos was brought on by the price caps the AEMO had imposed on generators, leading them to withdraw capacity from the east coast market.