ARARAT businesses are facing significant cost increases and the price of electricity continues to soar for both household and industrial uses.
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Electricity price rises have also hit the region’s hospitals, with East Grampians Health Service reaching out to the state government for help.
Gason managing director Terry Pye, whose factory produces caravans, agricultural equipment, mowers and woodheaters in Ararat, said he had been warned to expect increased costs.
“We were lucky enough to be locked into a contract until June 2018, but when we talk to our broker he anticipates a significant increase in energy prices for us come negotiation time,” Mr Pye said.
“I don’t know whether that is 20 per cent or 30 per cent, but it could be significant for us.
“About four per cent of our factory expenses are electricity, which doesn’t sound like a lot but it is significant.”
Mr Pye said his other costs were also rising and it was difficult to ask customers to pay more in a competitive sector.
“Energy is one of those things that, as your business grows, your energy use grows with the business,” he said.
“The more product you make and sell, the more energy you use.
“In a competitive sector like this, I don’t think we can afford to have runaway energy prices like we do now.
“Energy prices seem to be out of control and nobody appears to be attempting to cap them somehow.”
The Ararat Advertiser has spoken with other people involved with manufacturing in the region who said they also faced significant electricity price increases.
Mr Pye said at Gason, their reaction to increased costs would vary depending on how much money was involved.
Even in largely government-funded organisations, electricity prices were creating costs pressures.
“We won’t be able to pass that on, certainly not immediately,” he said.
“It will mean lower profit, it will reduce our ability to re-invest in the business and ultimately not containing energy prices is going to put employment at risk.
“That would be the last resort for us because we have a skilled workforce. We will have to pass the costs on.”
Electricity price rises have also hit the region’s hospitals, with East Grampians Health Service reaching out to the state government.
East Grampians Health Service chief executive Nick Bush said he had asked the Department of Health and Human Services for assistance with reducing consumption.
“Our electricity costs are set to increase by $200,000 in the next financial year, to a total of $400,000,” Mr Bush said.
“We have contacted the Department of Health and Human Services for assistance with reducing our consumption.
“$200,000 is a significant amount of money but these unexpected costs do arise from time-to-time.”
Mr Bush said a lot of the health service’s consumption had come from hot water heaters and they had looked at senors and timers to deactivate air conditioning in office areas when they were not in use.
Ararat manufacturing business Gason had already tried switching to LED lighting in its offices and on the factory floor and buying more energy efficient machinery.
Gason managing director Terry Pye said it was still an ongoing battle.
“The problem is that every time the electricity price goes up, you lose the previous cost benefits from improving your energy efficiency,” he said.
Prime Minister Malcolm Turnbull and Energy Minister Josh Frydenberg met with the heads of energy companies on Wednesday, but the outcome was more to do with household and small business than industrial users.
The energy retailers agreed to write to more of their customers to inform them if a better deal is available.
“As many as 2 million Australian families and small businesses could save hundreds of dollars on their electricity bills,” Mr Turnbull said.
Last week, Ripon MP Louise Staley used her time in parliament to attack the state government for its energy polices, accusing it of being a an “ideological frolic”.
“I grieve for the employers and households in Ripon who are shivering through winter faced with spiralling energy prices,” Ms Staley said.
“Victorians are suffering because of the Premier's flawed policies.
“The Victoria Renewable Energy target is hurting the most vulnerable.”
Premier Daniet Andrews has said Victoria’s target would cut the average cost of power by around $30 a year for households, $2500 a year for medium businesses and $140,000 for companies.