Energy price hike adds to unsustainable trend of skyrocketing business cost

Friday 28 May, 2010 | Tags: Economic Policy, Energy Environment and Sustainability

On the back today's announcement by Queensland Competition Authority (QCA) to increase energy price bills by 13.29 per cent, Chamber of Commerce & Industry Queensland (CCIQ) has called on the government to urgently address performance standards and approve more power stations and other energy infrastructure.

CCIQ President David Goodwin said Queensland has now seen four consecutive energy price increases equivalent to nearly 50 per cent, however despite ongoing price increases no improvement in performance standards has been achieved.

"There is a serious disconnect between supply and demand. Business is being affected as power is artificially restricted. With the Queensland's population continuing to boom, further delay in infrastructure improvements will only exasperate current problems.

"Queensland needs to start immediately with a new power station in Townsville and then look to roll out more stations further down the coast.

CCIQ recent survey further supports these comments and shows a growing dissatisfaction among the business community over the state's energy market.

The survey showed that 60 per cent of responding Queensland businesses rated the cost and planning for Queensland's energy infrastructure as inadequate or grossly inadequate.

Only 10 per cent of Queensland businesses rated the quality and capacity of the Queensland energy infrastructure as being good or very good.

"This evidence suggests that the electricity industry is not meeting the expectations of the business community for 'minimum service standards' yet the QCA continues to bow to the demands of the electricity industry, without consideration of the quality, capacity and service improvements actually being delivered," Mr Goodwin said.

"Ongoing price increases without any improved performance standards does not achieve the intended objectives of the previous electricity market reforms and compromises the competitiveness of the Queensland economy.

"This is a cost Queensland businesses cannot afford."

In this year alone, Queensland businesses have had to deal with the introduction of the Fair Work Act and new modern award system, a 13 per cent increase in workers compensation premiums, successive interest rate rises and increasing business costs following the removal of the fuel subsidy and increased state government taxes.

"Falling revenues and price sensitive consumers mean many businesses will not be in a position to pass on higher costs to their customers, placing even greater pressure on already compressed profit margins of Queensland businesses," Mr Goodwin said.

"Queensland's electricity costs represent a major area where we can either stimulate or suppress ongoing economic growth."