Businesses face a difficult winter of further energy price hikes that could prove unsustainable for some coming on top of soaring costs already, say owners.
Pat McDonagh, motorway services stop owner and Supermac’s fast food chain founder, said his electricity bill for the Barack Obama Plaza off the M7 Dublin to Limerick motorway has jumped by more than 150 per cent to €56,000 for July compared with €22,000 for the same month last year.
Going to the wall
“It is a massive increase. This will put at least 10 per cent of businesses to the wall before Christmas. It is pretty much unsustainable,” said McDonagh.
“Anyone who is out of contract will pay massive increases from where they are now because the companies won’t give a contract … because the market is too volatile. It is not going to stop there. It is going to increase further over the next couple of months.”
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The increase is the equivalent of paying eight additional staff a week, he said.
“It will inevitably mean price increases down the line because no business can sustain. There are going to be food cost increases as well as labour increases. It promises to be a tough winter.”
Jim Treacy, owner of SuperValu in Churchtown, south Dublin, one of State’s busiest supermarkets in the Musgrave-owned franchise, said his electricity bill would be tripling to €33,000 a month from next month, amounting to an increase of more than €240,000 over a year.
“It is horrific. We have to suck it and see, pay the bill and hope it doesn’t keep going up. It is frightening,” he said.
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He has already maximised the best use of electricity with more efficient, lower-cost fridges — a major running cost for a supermarket — but he is limited in further mitigation action he can take.
“Long term, it is a serious problem. I don’t know what is going to be done. I think the Government will have no choice but to help businesses in some way,” he said.
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Birgitta Hedin-Curtin, founder of the Burren Smokehouse in Lisdoonvarna, Co Clare, said she saw a big increase in electricity costs when they locked in for a year last February, while electricity costs have already almost doubled in her other business, The Burren Brewery, already this year.
“We are fearing that another increase is coming. I am Swedish and I look at newspapers online and this is happening all over Europe. It is very worrying,” she said.
“It is something that can really make or break a business.”
Hedin-Curtin has priced solar panels as a way of mitigating her costs.
“It is certainly a huge concern for the future, on all costs. It is not only electricity but that is the one that is really growing exponentially,” she said.
Manufacturing costs
Martin McVicar, co-founder of Co Monaghan forklift manufacturer Combilift, said the firm’s energy costs had more than doubled over the past 18 months and it was looking like they will double again after his fixed-rate electricity contract comes to an end tomorrow.
Higher energy costs mean higher manufacturing costs and Combilift’s long delivery times leave the company having to absorb higher costs rather than pass them on to customers.
“It means we are swallowing the pain on the bottom line in reality,” he said.
McVicar believes some manufacturing companies will not survive the energy crisis on top of higher costs on raw materials, transport and supply chain issues, particularly for those companies that have taken orders on their products at a fixed price.
Combilift has also bought two generators and is investing in a third, larger generator as a contingency to protect against potential electricity outages.
“It is really an insurance policy and it is the concern about energy supply that is driving us to invest in them,” he said.
