Light FM’s 300 percent power bill increase has implications for radio industry

Light FM Melbourne has been hit with a 300% increase in its electricity rate in a new contract struck this month.

Radio broadcasters are big energy users and the Light FM case will ring alarm bells for many stations.

The station’s power bill will jump from the previously locked-in three year rate of $12,300 per year to a rate of $34,100, renegotiable each year.

“We have been negotiating for the past month,” Light FM’s CEO Jarrod Graetz told radioinfo.

The issue of power prices is a political one, with the station’s rate negotiations falling at a time governments are privatising power stations and passing the buck on rising energy prices. In Victoria, the Hazelwood power station will close today.

“The suppliers and the brokers have given us various reasons for the price hike. The Hazlewood Power Station shut down is one reason they gave us.

“Another reason we were told is because of the instability in the energy network in Australia at the moment. It’s a triple wammy, we were negotiating in the same month as Hazlewood, there’s been a very hot summer and there’s pricing instability. We seem to be caught in middle,” said Graetz.

Light FM used a broker to get about a dozen quotes, which ranged from $34K to over $40K, then negotiated directly with the cheapest supplier.

The costs are for the stations’s studio power usage. Transmitter power was not a current issue for the station, but could be in the future. “Our transmission is contracted to a transmission operator so that has not hit us yet, but it could in the future.”

Light FM’s previous kW hours were costing between two and a half cents in off peak times to four and a half cents in peak hours. Now the cost will be nine and a half to eighteen and a half cents.

Graetz says he has learned a lot about electricity pricing from the experience.

“We are not on an SME rate, we negotiate directly. If you are a home user your consumption might be too small to move you into a negotiated rate, but a radio station uses enough electricity to move it into the range where price is negotiable. Negotiating is usually better than a fixed domestic level rate.

“We spoke to experts, retailers and brokers, we started digging into it to work out the best way to get a good rate. Prices are moving quickly, if we had locked in last month we would have paid 24K, now, 4 weeks later we are paying 34K. I would advise anyone in a similar position to lock in quickly, rates are changing fast.

“What we’ve been told is, until stability returns to the energy sector, there is no stopping prices skyrocketing.”

What are the implications for the station’s budget?

“We are a not for profit operation, on a calendar year budget, the majority of our funds are donated. Of course we will have to prioritise electricity over other things to stay on air, so it will take money away from our other initiatives unfortunately.

“Anyone coming up on a new contract will be faced with the same situation. I think we will need industry and government intervention on all levels to stabilise this,” said Graetz.

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