Community pharmacy owner Peter Feros looks at how skyrocketing electricity prices are hitting pharmacies, and their patients
The Australian Competition and Consumers Commission’s electricity affordability report reveals the
huge cost to consumers of environmental schemes across the:
1. National Energy Market including the large scale renewable target.
2. the small scale renewable energy scheme
3. and solar feed-in tariffs.
These schemes combined added to household energy bills per year of:
• $170 in South Australia
• $155 in Tasmania
• $109 in NSW
• $93 in Victoria
• $76 in Queensland*
The Australian average is $108 per household (residence) per year.
These annual cost per household may appear small amounts, however they are not small when the
Australia wide impact is taken to account.
The Australian population is around 25 million. Let’s be generous and say there are 2.5 persons per household. Therefore there are 10 million households (residences).
The Australia wide electricity paid by households is 10 million times $108 – therefore $1.08 billion a year.
The ACCC quantification of this $ 1billion plus being ripped of consumers by electricity subsidies explains the report in the AJP in September 2017 where comments from Chemist Warehouse’s Damien Gance were quoted: “Soaring energy bills are creating a tough retail environment for Chemist Warehouse” and “that the retail environment is as difficult now as during the GFC of 2007.”
Reporting on the weak retail sales at the time other commentators such as Gareth Baird from the CBA and the Ai group identified rising electricity prices as a factor.
But what can you do as an individual pharmacist about this rip off?
Well, why not make it a topic of the day when you chat with your patients. Ask about how escalating electricity prices are impacting their lives.
Apart from recognising your patients concern, such discussion offers the opportunity to identify patients who may be forced to consider forgoing obtaining their medicines because of spirally electricity cost.
If the patient is doing so you could make a practical, positive impact on someone’s life by offering to make arrangements that ensures they are able to continue taking their essential medicines.
At the very least you will demonstrate empathy – an important attribute that is the essence of community pharmacy and a reason community is ranked very highly for trust by patients.
Let me assure AJP readers that it is not just Chemist Warehouse impacted by the escalating electricity costs. All community pharmacies are being affected.
All pharmacies’ sales are being impacted by their patients having $1billion less to spend. In addition, all pharmacies have been directly impacted by their pharmacy electricity costs rising by more than CPI.
The Pharmacy Guild of Australia Guild Digest 2008 reports average annual electricity, heating and water costs at $6,869.
The 2015 Digest reports these costs at $13,094. That is an increase of $6,225 and 90.6% in 8 years (11.3% per year).
The increases were most likely higher than this 11.3% as the Digest does not report actions taken by pharmacies to reduce electricity costs. e.g. switching to LED lighting, installing solar water heating and / or solar panels.
The total cost to all Australian pharmacies from the escalating electricity prices is over $25m per year.
The Digest reports the past, but what of the future?
Let me share with readers my experience, July 2018, of renewing by tender the two year electricity contract for a small business my wife and I own (Heritage Hotel Dorrigo).
• The lowest bid for the two year contact was $34,837 up from $25,364.
• That is a $9,473 and 37.36% increase.
Why this massive increase? The energy broker we used to tender the 2 year contract provided the following graph to explain the increase.
The spike in electricity costs was due to the closure of the coal fired 1,600 MW Hazelwood power plant in Victoria.
Not only is this Hazelwood closure escalating electricity costs for small business it is draining the water storage lakes of the Snowy as Snowy Hydro power has to make up for the Hazelwood closure.
In 2022 the Turnbull Government is allowing the 2,000 MW Liddell power plant to close.
If the course of Hazelwood created a 37% increase in electricity costs what will the closure of Liddell do?
This is the very question I have asked my Federal MP, Paul Fletcher (Lib, Bradfield, NSW).
Whatever, I am certain community pharmacy will not be compensated via an increase in the PBS
AHI, for the current and future escalating electricity costs.
Reference: The Australian, 12th July 2018