Auckland Business Chamber chief executive Simon Bridges Photo: RNZ / Samuel Rillstone
Businesses say they are struggling to keep their doors open as energy costs surge, but they're reluctant to speak up in fear of retaliation from energy suppliers.
An Auckland Business Chamber and Northern Infrastructure Forum (NIF) survey of small and medium sized businesses, heavily represented by manufacturers, found 90 percent identified energy costs as a primary concern, while half said the costs were highly concerning.
Chamber chief executive Simon Bridges said energy costs combined with pressure from weak market demand, inflation and increased compliance costs had left many businesses struggling to keep their doors open.
Bridges said one unexpected and troubling insight from the survey was the reluctance on the part of businesses to be identified when sharing their struggles with energy costs.
"Many of the businesses we spoke to - especially those dependent on gas supply - were really uneasy about speaking publicly, for fear that it could jeopardise their ability to secure future energy contracts with the gentailers, who control close to 85 percent of the retail market.
"Whether this fear reflects an actual or perceived risk, it points to serious issues with the way market power is being exercised, and is really worrying," he said.
"It's high time the government had a good, hard look at the vertically integrated gentailer model, and the impact it's having on the performance of the sector."
NIF executive director Barney Irvine said the survey results also underlined the drag that energy costs were placing on New Zealand's growth and productivity.
"As a response to rising energy costs, 52 percent of business surveyed say they have increased the prices they charge to customers," Irvine said.
"A quarter say they cut back production. The same proportion say they have laid off staff and just under 20 percent have cancelled or deferred investment."
The survey found more than three-quarters of respondents believed the government should treat addressing energy costs as a high or very high priority.
"The government has a good sense of what needs to be done to turn the performance of the sector around for the long-term," Irvine said.
The Chamber and NIF wanted to see the government implement a 10-point energy action plan they launched in February to address the issues raised by the survey.
Mercury 'disappointed'
Mercury Energy's executive GM wholesale markets Tim Thompson said the energy provider recognised it was a "challenging environment" for its customers.
"We are doing everything we can to support those who need it as we go through the shift to a more renewable system.
"That's why we are disappointed to hear that any business would feel unable to talk to us. We urge anyone going through difficulty to get in touch if we're their supplier. We have a range of ways that we can help.
"While we haven't had an opportunity to see or discuss this survey, we remain eager to talk with Auckland Business Chamber and Northern Infrastructure - it's important we all work together on what is a shared ambition for an affordable and accessible electricity system."
The other three big energy companies have also been asked for comment.
Electricity Retailers Association chief executive Bridget Abernethy said there was no doubt cost of living pressures were an issue for Kiwis.
"Cost pressures in the electricity sector reflect those right across our economy. Unfortunately, a shortage of the gas we need to generate electricity, along with increased transmission and lines charges, mean costs are under even more pressure. ERANZ members and other generators, are continuing to rapidly build more generation, which is the most effective step to address these cost pressures in the longer-term.
"Retailers are focused on the best interests of their customers and are always available to help customers with pricing or supply issues. Most are proactive in finding solutions for their customers to help them. We encourage businesses with questions or concerns to talk to their retailer - they are there to help."
Abernethy said members welcomed engagement and feedback from businesses and industry groups.
