THE Tasmanian Chamber of Commerce and Industry has swung its weight behind a call by the Brighton Council for the government and opposition to act urgently to bring energy charges in line with the national average.
The call came in the wake of revelations that Polyfoam – a supplier of polystyrene containers and material for the aquaculture, agriculture, building and construction, and medical sectors – was paying more than two and a half times what it paid at its other plants interstate for energy.
Brighton Mayor Tony Foster said excessive energy charges were placing Polyfoam’s highly efficient local manufacturing plant at Bridgewater at risk.
Polyfoam relocated from Franklin to Bridgewater in 2007 to expand production and, principally, to access cheaper natural gas to fuel its operations.
Polyfoam’s Tasmanian manager, Greg Riley, said the facility at Bridgewater was the most modern and energy efficient plant of its type in Australia, yet gas and electricity charges were up to 258 per cent higher than those interstate.
“When comparing the energy costs of our operation in Victoria to that of Tasmania for August 2013, it revealed we are paying more than double the price for gas at $19.57 a gigajoule, rather than $7.59 a gigajoule,” he said.
“Electricity charges were also evaluated, with our Bridgewater operation charged $0.2264 a kilowatt hour, compared to just $0.1288 a kilowatt hour in Melbourne.
“With these results we have also proactively approached our gas provider in Melbourne, who advised over the next three years our gas charges would rise to $8.19 a gigajoule in Melbourne – still less than half of what we are charged in Tasmania.
“The direct employment of 16 Tasmanians is at risk, not to mention those of the contractors providing transport, maintenance, waste removal and other supporting services due to the outrageous price paid for energy.”
Cr Foster said unfortunately, the steep rise in the price of natural gas and electricity had impacted on the company’s profitability to the point that the owners were seriously considering whether to continue manufacturing in Tasmania.
“It is understood that the government negotiated a ‘take or pay’ gas deal and, with the Bell Bay Power Station no longer in operation, prices for other users have risen substantially to compensate,” Cr Foster said.
“This is a serious issue and it is difficult to see how any Tasmanian business can compete when the energy playing field is so out of kilter.”
Cr Foster said Polyfoam had approached the state government seeking relief and had provided Melbourne-Tasmania cost comparisons.
The only response was advice to contact the Department of Economic Development to see if financial help could be obtained to purchase a bio-fuel boiler.
“This makes the hundreds of millions of dollars spent on bringing natural gas to Tasmania seem like little more than a joke,” Cr Foster said.
“The government response is most unsatisfactory.
“What value is the availability of natural gas for business, as well as householders, if it is too expensive to use and, worse still, threatens business viability?”
Cr Foster said Polyfoam was also disadvantaged by the cost of transporting raw materials to Tasmania – which did not qualify for freight equalisation – while competitors could import their products and receive the freight subsidy.
“The situation has placed Polyfoam and probably many other Tasmanian businesses at risk and, in the election climate, both the state government and the opposition as the alternative administration must commit to bring Tasmanian energy prices into line with those interstate,” he said.
“The tragedy of this is that Polyfoam’s Bridgewater plant is under threat from costs beyond its control, yet it is the most efficient and modern of all the company’s operations.
“The politicians cannot hide behind the Economic Regulator as Tasmania can ill-afford to lose businesses and employment.”
TCCI chief executive Michael Bailey said Tasmania had worked hard to attract gas to the state, but the price rises ran the risk of undoing much of this work.