Gas companies push to charge SMEs for increased costs from natural disasters

As bushfire season continues across Australia, small businesses and households in Victoria could start paying more for their power consumption after gas companies lobbied to be allowed to increase charges for events beyond the energy company’s control.

The Australian Energy Regulator received submissions from SP Ausnet, ElectraNet, Powerlink and Victorian gas distribution companies pushing for the ability to raise costs if they incur costs associated with an uncontrollable event like a natural disaster.

Chief executive of the Council of Small Businesses of Australia, Peter Strong, told SmartCompany small business would be most affected by the unpredictability of these costs.

“Because we budget on what we know… If you’re a small supermarket with lots of fridges and freezes, the impact could be huge,” Strong says.

“Small businesses are accused of not planning properly when we do, but it’s very hard to plan when we’ve got governments and big businesses making decisions.”

A spokesperson from AER told SmartCompany the ‘pass through’ of costs to consumers and businesses will not be automatic.

“In determining the amounts that network businesses may charge their customers, the AER makes allowances for businesses to obtain insurance cover for certain losses,” she says.

“For some risks, the insurance costs are so high that it may lower overall cost to customers if the business self- insures, and an allowance is made for this, or that the costs are passed through to customers if an event that is beyond the control of the business occurs.”

The factors the AER will consider are:

• The previous allowance for insurance and self insurance to be sure that customers do not pay twice
• Actions the network business may/may not have taken to reduce the magnitude of the pass through amount; and
• Actions taken by the business which affect the magnitude of the amount [costs] involved.