Energy crisis: Small businesses ‘panic’ as 400 per cent hike in energy bills could lay off thousands

The country’s thousands of small businesses are facing an energy cost crisis that will have a massive impact on households.

The businesses most affected are smaller family businesses in the retail, distribution, hospitality, manufacturing and food processing sectors.

Electricity prices have skyrocketed by 300 to 400 percent since the energy crisis began in January last year, according to a leading corporate energy consultant.

It is feared many small businesses will have no choice but to lay off tens of thousands of workers, many of whom are unlikely to survive the winter. Those that survive are forced into repeated price hikes.

Businesses have been left in the dark about the extent of the price hikes and what’s to come, as utilities aren’t telling businesses when they will raise prices.

This contrasts with the situation for consumers, where suppliers warn households in advance when prices are about to rise.

Business energy prices are driven by wholesale prices, according to leading business energy broker Finbar Healy of PowerHouse Energy Management.

“Unlike private customers, there is no protection for companies. Prices are based solely on the wholesale market,” he said.

This has caused bills for many companies to skyrocket by 300 to 400 percent without warning in line with soaring wholesale gas prices.

This has sparked panic and raised questions about the profitability of many smaller companies, he said.

Around 270,000 SMEs employ around 1.1 million people in Germany.

Ireland is a country of family businesses, but the situation is so dire that many have had to close their doors

Economist Austin Hughes said such large increases in energy costs would inevitably lead to higher consumer costs for goods and services. He said the magnitude of the energy price hikes is so great that many companies cannot pass on these costs and have no choice but to shut down.

Mr Healy, the energy broker, said the situation is so volatile that energy suppliers in that country cannot offer fixed tariffs to companies.

“Right now they are not offering anything. There’s too much risk. Suppliers are losing assets,” said Mr. Healy.

He said the prices charged to companies changed from day to day, with some prices rising a few times on the same day.

“Ireland is a country of family businesses but the situation is so dire that many are having to close their doors.”

He said businesses that would normally have an energy bill of between €10,000 and €12,000 a month are now being charged between €36,000 and €40,000 a month. The only solution for SMEs is the European Union’s move to cap wholesale gas prices, Mr Healy said.

When asked how many increases had been implemented in the last 18 months, Electric Ireland would not give the number.

It states: “Rate adjustments for business customer contracts are determined by a number of different factors, including but not limited to prevailing wholesale prices for energy, adjustments to pass-through costs, pricing and duration of previous products that a customer may have subscribed to, and the contract duration and start date of each new contract.”

The chief executive of the Convenience Stores and Newsagents Association, Vincent Jennings, said the energy cost crisis has the potential to shut down good businesses.

“We are seeing an increase in invoices of more than 300 items this month and last month compared to the same period last year and previous years. In monetary terms, that can be a jump from €4,500 to €15,000 in a single month,” he said.

He added that retail is very competitive and its members don’t have the ability to offset higher costs against the retail price of most of the products they sell.

“These products are already experiencing wholesale increases from our suppliers and we cannot expect to find our customers, who are also facing unprecedented hardships, paying double,” Mr Jennings said when calling for government support for smaller retailers.

The energy regulator said suppliers are required to tell non-household customers if they are going to raise their prices. Energy crisis: Small businesses ‘panic’ as 400 per cent hike in energy bills could lay off thousands

Fry Electronics Team

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