By Jessica Yun
Nico Vlahos, a barber in North Sydney, is already grappling with lower foot traffic to his shop as fewer workers return to their offices and higher costs for haircare products. Now he’s bracing for more bad news: his next power bill.
“It’s coming,” he told The Sydney Morning Herald and The Age. “But we don’t know [by] how much. Everything is more expensive now.”
Vlahos’ Barberiko is one of thousands of Australian businesses of all shapes and sizes that will almost certainly be slugged with higher power bills later this year amid the unravelling energy crisis.
Experts are predicting sharp increases in retail power prices later this year, with the Ukraine conflict triggering spikes in oil and gas prices, major coal-fired power stations suffering outages and a cold snap on the east coast driving up demand.
Analysts also say the dramatic intervention by the Australian Energy Market Operator (AEMO) to suspend the wholesale electricity market this week will also push up prices for consumers and small businesses.
“The cost of that gets passed onto all consumers by AEMO,” Grattan Institute energy program director Tony Wood said.
“The same thing happens with the compensation payments they have to apply to generators.”
Looming electricity bill rises are just one of several imposts small business owners are struggling to cope with while attempting to recoup losses from the pandemic. Others include a supply chain crunch and severe staff shortages, which are pushing up wage bills.
Belinda Clarke, chief of the Restaurant and Catering Association, said hospitality operators were actively trying to minimise impact to their bottom lines by switching equipment, operating at different hours, and turning equipment off when not in use.
“They’re always looking at ways to make adjustments because there are such small margins in hospitality,” said Clarke, who added many hospitality venues run on revenue margins of 5 per cent or even less. “So every little bit makes a difference.”
“It’s one of many costs of doing business, with food, freight, fuel, energy, staffing. Something’s got to give.”
Energy crisis ‘stressful’ for small business
Sandy Chong, who also runs Newcastle-based salon, SUKI, said electricity is a major cost for hairdressers.
“Blowdryers are going from 9am to 6pm or [even] 9pm at night,” she said. Electricity is also required to power various appliances, including washing machines and dryers that clean gowns and cotton towels, she added.
“They feel like they’re being hit from all sides,” said Chong, also the chief executive of the Australian Hairdressing Council and director of small business advocacy organisation COSBOA. “They’ve gone for two years feeling defeated and disheartened to trying to be resilient.
“It’s like you’re being pulled backwards. Take one step forward, ten back. I think a lot of businesses are feeling like that at the moment.”
Chong added that small business owners are also particularly conscious of raising their prices in fear of losing their customers. Vlahos shares a similar concern.
“I’m expecting the bill. I’m scared,” he joked. “But you can’t do anything - you can’t put the price up.
“So we try to find the balance.”
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