Power bills – How do SME’s manage soaring power costs?

By Zilla Efrat – journalist

The cost of wholesale electricity and gas tripled in the June quarter 2022 compared with a year ago. That’s more than double the previous high of $130 in the first quarter of 2019, and a little more than three times the average price in the June quarter of 2021.

Rising power bills are yet another stress point for small businesses already overwhelmed by other rising costs and interest rates.

Treasurer Jim Chalmers has reportedly described the soaring price of energy in Australia as “the perfect storm” because there are several drivers behind the price hikes.

One is the war in Ukraine. Russia is a major player in the world’s energy supply, but sanctions limiting the import of Russian oil and gas have halted its supply to many countries, shrinking the world’s supply pool.

Other reasons include global supply chain difficulties, rising gas and coal prices, outages at Australian at coal-fired and gas plants, increasing generation costs and extreme weather events like the floods in New South Wales and Queensland.

Australian small businesses were already struggling with their energy bills before these developments occurred.

Indeed, recent research by the Council of Small Business Organisations Australia (COSBOA) found that 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.

“Right now, small business owners across the country are grappling with how to pay down legacy bills leftover from COVID shutdowns and slowdowns,” says COSBOA CEO Alexis Boyd.

So, what can you do to help relieve the pressure of higher power bills?

Firstly, you could shop around to see if you can get a better deal from energy suppliers. That’s the advice from the Australian Energy Regulator (AER) chair, Clare Savage, who also urges consumers in financial difficulty to reach out for support through payment plans and hardship programs that retailers must provide, and the AER enforces, under national energy retail rules.

Next up, is to understand your energy use, including your daily electricity consumption and what types of energy-using equipment and appliances your business has.

Here, you may benefit from the services of an energy auditor. He or she will review your past energy bills, your equipment and the way your business operates and show you where you’re losing energy and what you can do about it.

There are many other ways to reduce your power consumption. One is load shifting which allows you to move your energy use to a cheaper time of day. This might mean running the business’ dishwasher overnight or pre-cooling your business premises earlier in the day so that air conditioners don’t need to run so much in the late afternoon or early evening.

Also operate your air conditioner efficiently by using the thermostat and timer. Government figures show that when it comes to cooling, you can save up to 10 per cent for each degree that you increase the air conditioner’s temperature. Conversely, you can save up to 10 per cent for each degree that you decrease the air conditioner’s temperature for heating.

Be aware of vampire appliances such as computer monitors, air conditioners and wireless modems. Some of these enter standby mode rather than fully powering down. They continue to consume energy even while turned off, meaning that you are paying for electricity that you’re not even using.

Indeed, EnergyAustralia estimates standby electricity wastage can contribute up to 10 per cent of your electricity bill.

EnergyAustralia says reducing standby power is as simple as turning devices off at the wall. But if power points are hidden behind furniture or you find it hard to remember to pull the plug, you may need some help.

This could include power boards which sense when you have shut down a device, such as a computer, and automatically cut power to appliances such as printers or external hard drives.

Remote-controlled power boards can solve the problem of hard-to-reach power points, but these also use a little standby energy so EnergyAustralia says it’s best to connect a lot of appliances to a power board to ensure you benefit from using it.

Energy Australia has these tips when it comes to your office equipment:

• Turn off your computer when you’ve finished with it.
• Set your monitor to switch off/sleep after 10 minutes when it’s idle.
• Reduce screen brightness.
• Close unused applications and tabs. On your smartphone, get rid of unwanted or unused apps so the battery power lasts longer.
• Switch off chargers at the wall once charging is done and avoid charging your phone overnight if you can.
• Turn off your printer, copier and scanner when you’re not using them.

There are also longer-term steps you can take to cut your energy bill, while also cutting your carbon footprint, if you own the business’ property.

One way is to go solar, if possible, and generate your own energy so you are not purchasing as much energy from the grid. You may also be able to offset installation costs through incentive or tax schemes.

Another way is to move to LED lighting. According to AGL, some of its clients have benefitted from savings of up to 80 per cent on the lighting component of their energy bill through effective lighting design and management.

Commercial lighting subsidies are available to organisations that upgrade from old, inefficient lighting to LED lighting. For example, the NSW Energy Savings Scheme offers subsidies if you operate in the state.

Better insulation could also be a solution, given that heating and cooling can account for 20 per cent to 50 per cent of energy used in Australian homes depending on the climate zone, according to government estimates.

You could also upgrade your appliances and equipment to more energy-efficient models to reduce the amount of energy used. If your rising energy bills are keeping you up at night, give us a call to discuss solutions.

Feel free to contact us for anything that relates to your business finances so we can help with your success.

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