Small firms face large  bills in inflation crisis

Small firms face large  bills in inflation crisis

Isme said it has for some time pleaded for recognition of the equally large contribution made to the economy by small businesses. Picture: iStock

IRISH small businesses, including cafés and small shops, are paying an unjustifiably large share of the national electricity bill compared with large companies and multinationals as the inflation crisis worsens, the head of a leading business group has claimed.

Isme chief executive Neil McDonnell said the business group has begun collecting data that suggest the traditionally large gap between the size of the utility bills paid by small firms and their big corporate counterparts has widened further, as electricity and gas prices have soared this year.

Mr McDonnell said early findings point to large energy users striking “markedly better” rates for their gas and electricity in recent months compared with the deals secured by small business customers.

Despite all companies getting quantity discounts, “the range here is really, really extraordinary”, he said.

“We absolutely get that people who are large consumers of a product get discounts, but some of the information we are seeing suggests there are 50%, 60%, or 70% differences between what the big guys are paying and what the small guys are paying,” Mr McDonnell said.

He cited an example of a small retailer who holds a franchise belonging to one of the large retail groups that negotiates large electricity purchases for the whole chain.

“The power of small businesses to switch has been seriously undermined because providers are looking for the two months’ average rental up front to sign on, and small businesses even at a standstill position are in pretty bad shape” before facing the threat of gas rationing, Mr McDonnell said.

He said the energy costs dilemma comes even before Irish companies face potential gas rationing in the coming months amid fears Russia would turn down or cut off completely its gas flowing down pipelines to the European Union, as part of the economic war that has flared in parallel since the invasion of Ukraine on February 24.

He said “the small guys are those who probably have the lowest ability to swallow more expensive prices”.

The Isme research cites a small firm involved in smelter work that consumes huge amounts of gas that would be crippled under any start-stop interruption to its furnace should gas be rationed from this autumn.

Mr McDonnell said the competitiveness of many Irish firms is up in the air because large companies and multinationals are able to secure deals that put Irish small business owners and all the jobs they provide at a huge competitive disadvantage.

He said from an Ireland perspective that the Government needed to be alert to the “extreme forces” facing small firms because they do not have the negotiating power over their electricity and water bills wielded by large companies.

Isme said it has for some time pleaded for recognition of the equally large contribution made to the economy by small businesses.

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