Pressure builds on Ergon over bonds

SECURITY deposits for electricity connections for businesses in regional Queensland are being reviewed after complaints by companies, business consultants and Townsville Chamber of Commerce.

Chamber board member Michael Kopittke met with representatives of Ergon Retail this week where a trial proposal was discussed.

Mr Kopittke welcomed the move, which he said would bring regional Queensland more into line with south- east Queensland, where deposits were much lower or not applied.

He said a statement on the detail of the proposal would be announced in coming days by retailer Ergon En- ergy but he believed the reductions in costs would be substantial. Businesses are being asked to pay up to 37.5 per cent of the estimated annual electricity bill as deposits under a Bond on Power policy, which can run into tens of thousands of dollars.

Bakery on Primrose partner Frank Aspland told the Townsville Bulletin last month Ergon had asked him to provide $ 30,000 to reconnect two premises, one for $ 20,000 and the other for $ 10,000, while industry professionals said the deposits were enough to kill business sales and leasing deals.

“On average we believe there will be substantial reductions in set- up costs for electricity in regional Queensland,” Mr Kopittke said.

But he said actual amounts would still be based on an individual’s payment history and a risk assessment of the business or site.

Ergon says the deposits may be required if the customer has insufficient or no credit history but it appears the deposits are always required for new business customers in regional Queensland.

Mr Kopittke said start- up businesses in south- east Queensland were not being asked to pay the same level of deposit or sometimes were not asked for a deposit.

He believed this was because of more competition in the retail market.

“We think we are not getting the same treatment as south- east Queensland,” Mr Kopittke said.

Transworld Business Advisors Townsville broker Peter Braid welcomed the review and believed any reduction would make a big difference.

Mr Braid said a requirement for a $ 4500 electricity deposit spoiled a potential deal for the sale of a cafe business in Townsville recently.

“It makes it a lot easier when you are trying to sell a business if there’s not another cost like this that you are having to factor in,” Mr Braid said.

Mr Kopittke said the chamber would continue to meet with Ergon Retail to help provide information to businesses on the best tariff options.

An Ergon spokesman said an announcement on the review would be made shortly.