Record electricity prices in Spain put many businesses on the ropes
The average 35 percent increase in energy bills isn’t just affecting households, but also the profit margins of small and medium-sized companies that have already been hit hard by the Covid pandemic
Energy costs have risen an average of 35 percent this year and the viability of many small and medium-sized companies, already affected by Covid, is now under threat according to Malaga’s Chamber of Commerce.
The price of electricity in Spain is more expensive than ever. The Government’s decision, in June, to lower the sales tax on the electricity bill from 21 to 10 percent, has already been absorbed by a market that does not stop increasing, and in which the final consumer is the biggest victim.
Sergio Violeros is a 46-year-old fitness fan. In 2014, he decided to turn his passion into work and opened his own gym. It is a 200-square-metre space and, apart from the fitness equipment, the ceiling holds two essential elements for the gym to function: a long string of powerful spotlights and an air conditioning system that cools the high summer temperatures.
If the rise in electricity rates affects households, now the viability of Sergio’s business is at risk from the hike in energy prices, following the hardship of the months in 2020 when the gym had to close due to the pandemic.
“I have never had an electricity bill like now in July,” he points out before going on to list his energy consumption: “April, 103.41 euros; May, 142.30 euros; June, 240.75 euros and July, 441.20 euros.”
“Actually, I know I can’t afford to have the air conditioning all the time, but if I turn it off, customers immediately complain about the heat – and rightly so,” explains Violeros.
The dilemma of the owner of this gym is one shared with many other small and medium businesses, who see how their already narrow margins are being hit by the electricity bills
The president of Malaga’s Chamber of Commerce, Sergio Cuberos, said that every day they receive complaints from small businesses who are “scared” and “outraged” at the increase in their electricity bill. “The average rise in Malaga is between 30 and 35 percent and it is hurting businesses. So much so that some companies are already considering closing,” he told SUR.
Cuberos has appealed to the Government to find solutions to a problem. “They have to do something for these small businesses. As we try and recover from the blow of the pandemic this increase in the price of electricity arrives, which is leaving many businesses without a profit margin,” he says.
One of them is Jorge Arrabal, who has a small hairdressing salon near the Teatinos university campus. “I have to have the air conditioning on all day for my clients who are already sweating under the cape. In July, the bill has skyrocketed, and my premises are only 28 square metres,” explains Arrabal.
There are more examples.
Sergio Guzmán is the owner of Padel Málaga. Six padel tennis courts are located in a warehouse. “Being indoors, the lights always have to be on. The air conditioning, the same. I have gone from an invoice of 700 to now paying about 1,100 euros for electricity”, saying that this increase puts the viability of his business at risk: “We cannot pass this increase on to the client, we would lose them. This increase in electricity leaves us without margins.
If it weren’t because he has a good bed mattress at home, says Jorge Guerrero, it would be hard for him to sleep at night. He is the head of the Malaga group Mi Colchón, which has several stores in the city. Guerrero directly manages six, the rest are in the hands of franchisees. Since the price of electricity began to climb, the bill became a headache for this businessman. “We are talking about an increase of 30 percent,” says Guerrero.
For the month of July, the energy bill of his six stores amounted to 4,300 euros. Guerrero, with bills in hand, points out that “the increase in electricity bills is unsustainable.” In July 2020 the bill was 3,100.
Guerrero recently undertook a comprehensive reform to equip the Mi Colchón stores with low-consumption led lights. “You invest to save money but even now we pay more than before,” he says. The problem, he confirms, is that this added expense cannot be passed on to the client. “It is not like before, the margins we have now are very narrow,” he points out.
Guerrero tried to reduce the use of air conditioning but quickly realised that he cannot afford it. “In less than ten minutes, the sales space turns into a sauna.”
For Guerrero, in addition to the business people themselves, the other main losers will be the workers. “With the increase in electricity bills, jobs will be lost,” he regrets and hopes that the Government will be able to find a solution to the problem.
Published surinenglish.com 26 August 2021