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ACCC’s Electricity Price Inquiry confirms small business’ viability at risk from rising energy costs

COSBOA supports the ACCC’s view that the National Energy Market is ‘largely broken’ and needs serious reform to reduce the crippling burden of rising energy prices for small business.

However, the good news is that small to medium businesses could save an average of 24 per cent on their electricity bills if the recommendations in the report are adopted.

Peter Strong, CEO of COSBOA, said today, “the ACCC inquiry into electricity pricing has found that the overwhelming majority of small business owners have been paying well-above market rates for their electricity. Electricity retailers are overcharging business customers on standard contracts, and most small businesses in Australia are currently on standard contracts.”

By simply moving from a current high ‘standing’ offer to a standard ‘default’ offer, small and medium businesses could save an average of $1450-2250 - and COSBOA is urging all of its members to call their energy retailer and make this request immediately.

“In addition, there is currently very little transparent information available to businesses to allow them to compare prices for their industry, which makes getting a better deal even trickier” said Peter.

The ACCC report also highlighted the need for better monitoring and tracking of small business' electricity costs, and recommended that the COAG Energy Council could play an role in ensuring better price reporting and monitoring occurs.

Last month COSBOA commenced a new advocacy project, funded by Energy Consumers Australia and the Australian Small Business and Family Enterprise Ombudsman’s Office, to specifically address these issues and help small businesses to ‘future proof’ themselves against rising energy bills.

As part of this ‘Future Proofing Energy Bills’ project, COSBOA has been investigating measures to ensure small business gets better quality information about average electricity costs for their industry and more support and tailored advice to help them cut their electricity costs.

The project involves a national survey to collect evidence on how energy costs impact small business, and developing industry-specific case studies to show the real life impact.

The project results will be used to advocate for policy and regulatory changes, and to develop simple tools, with industry-specific tips and info, to help small businesses in a range of sectors reduce their energy costs. Small businesses will be invited to participate in a national survey to find out what measures will be of greatest benefit, and fit the needs of various industries.

“COSBOA is pleased that the ACCC has made such bold recommendations in its report and we believe they are well overdue” said Peter Strong. “Small business owners across the country can be assured that their voice is finally being heard, and we urge the Federal Government to take immediate action to ensure the report’s recommendations are implemented.”

What the ACCC’s recommendations could mean for small business

The ACCC has made a series of recommendations to help reduce small business' electricity costs and to clean up the retail electricity market.

These include getting the Australian Energy Regulator to set a maximum default price on electricity retail offers and doing away with standard contracts. This means that all discounts offered by retailers would have to refer to this default price. This makes it easy for businesses to make sensible comparisons on the prices offered by different providers.

The ACCC also wants to impose a mandatory code of conduct on electricity price comparison sites so that any recommendations they make to businesses on electricity deals must be in the customer's best interest.

These measures will force electricity retailers to cease the practice of price gouging through opaque and confusing standard offers, and will ensure that comparison websites are showing businesses the deals that provide them with the best value for money.

ACCC Chairman Rod Sims also called for governments and energy agencies to do more to improve the information and support they provide to small business.

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