Huge deposit a powerful disincentive

THE soaring cost of electricity is a big issue for householders and business people, particularly in North Queensland.

While regional householders and small businesses are shielded to some extent through regulated pricing and the payment of subsidies by the State Government amounting to more than $ 600 million a year, our large businesses pay a premium of 20 to 30 per cent compared with their counterparts in central and south Queensland.

This is because of transmission costs associated with the need to draw electricity from power stations so far away in central and southern Queensland.

So it is something of a revelation to learn that retailer Ergon Energy is requiring security deposits of as much as 37.5 per cent of a business’ estimated annual bill to connect new businesses to the electricity grid.

Townsville Chamber of Commerce has raised the issue, saying businesses have begun citing the policy as an impediment to starting trade, perhaps because as the economy improves opportunities for new businesses only now are beginning to arise.

It might also be that under the policy as electricity prices rise, so too does the security deposit.

Certainly, deposits amounting to $ 20,000 to connect premises for a small bakery, as our story reveals today, are a lot of money to find for a new business among the myriad other expenses and red tape to overcome to begin trading.

At a time when so many people are unemployed and small business is expected to provide the majority of jobs that are so badly needed, huge electricity security deposits do not help.

It is appropriate that Townsville- based State Government Minister Coralee O’Rourke has at least acknowledged that these are legitimate concerns.

Ms O’Rourke says she can understand it can be challenging for small businesses starting up and that the Government doesn’t want to see them facing unnecessary hurdles.

But the real test will be whether Ergon actually amends its policy to take these circumstances into account.