SFA reaction to electricity price increases


The Director of the Small Firms Association, Patricia Callan has stated that the announcement by the Commission for Energy Regulation (CER) of interim electricity price increases of 17.5% from 1st August, is completely unacceptable to the small business community.

“Three weeks notice that a major input cost is going to increase by such a large amount is ridiculous” - commented Callan. “Is the energy regulator intent on putting more companies out of business and more employees on the dole?”

She added - “Energy is complementary to the rest of the economy. A failure to supply energy at competitive prices adds costs to businesses operating in Ireland, with consequential effects on business competitiveness. It is incredulous that, at a time when every economic report on the Irish economy stresses the need to reduce costs, increase productivity and regain competitiveness, Irish businesses are again being undermined in this way.”

Callan said that - “this type of decision has now become the hallmark of the regulation of the Irish public utility sector. The consequences of this decision will be severe and will undermine the exposed sectors of the economy, increase the already high inflation rate of 5%, add to raw material costs and will critically impact our manufacturing sector. Competitiveness is critical to the survival of all Irish companies and energy price is a key input indicator.”

Even before this announcement, in the SFA’s 7th Annual Business Survey (Click Here), energy costs emerged as the third most significant issue (after labour costs and inflation) in terms of business costs - being cited as the No. 1 Business problem by 9.7% of respondents - and as a major business problem by 66% of small businesses.

“The small business community urgently requires a business-friendly energy policy - which ensures the secure, reliable, efficient and competitively-priced delivery of energy, as a key ingredient for successful and sustainable growth of businesses, competing in a global marketplace.”

The Government coffers have reaped significant benefits from VAT and excise duties collected on foot of the increasing oil and energy costs being paid by small businesses. “In Budget 2009, the Government must address these issues by reducing excise and VAT rates on energy and by providing enhanced capital grant aid and/or tax credits for energy-efficient investments.”

Concluding, Callan stated - “the current model of energy market liberalisation has not alone failed, but has also added significant costs to Irish business. This proposed increase in electricity prices is simply unacceptable to the small business community. There is little or no effective competition in the energy supply markets in Ireland for small businesses.

"In addition, investment in energy infrastructure must be financed in an equitable manner to ensure that customers of today are not paying for the benefit that will also be derived by future generations. We need to see some equity in this system, some competition in the system - but all we get are price increases.”