New electricity tariffs threatening regional Queensland foundries

The national secretary of the Australian Foundry Institute Joe Vecchio has sounded the dire warning, saying the tariffs proposed for July 1, 2020 would significantly increase pricing to the point they would not be viable to continue manufacturing.

"This has been known for five years and I've been battling to get them to understand what it means for all that time," Mr Vecchio said.

If the proposed pricing policy is implemented next year, he said the business he was operations manager for, Northern Iron and Brass Foundry at Innisfail, would face an electricity price increase of $400,000.

Both it and Bundaberg Walkers are currently paying $1m a year for power. The latter estimates its power bill will rise by $700,000 next year. That business employs 96 people while the Innisfail business owned by Iplex Pipelines has 79 on the books.

Mr Vecchio listed Whites Industries at Dalby and CQMS at Maryborough as struggling with the same dilemma, along with numerous other smaller businesses around the state, employing a total of over 700 people.

The Maryborough business expects its power bill will rise by over a million dollars.

"All foundries are already hurting from their electricity pricing on average increasing 100 per cent over the last 10 years," Mr Vecchio said. "Ergon Energy experts say there is no infrastructure that will offset these large increases."

Diesel generation was not an option, Mr Vecchio said, describing it as expensive with slow payback.

"We're not in the business of generating power, and fuel prices are all over the shop," he added.

Passing on costs to customers was not possible either.

While the company has a strong customer base manufacturing products for water infrastructure, railway and mining users, Mr Vecchio said passing costs on would lose them that business and further threaten their viability.

"I really don't know how we are going to survive unless something is done."

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Saying their only saviour was a revision of the tariffs, he was putting his faith in a meeting between himself, Energy Minister Anthony Lynham and a Bundaberg Walkers representative in Brisbane on July 3.

Dr Lynham said he was engaging directly with foundries and other industries on Energy Queensland's proposals, which was assessing new tariff options that may benefit businesses currently on obsolete tariffs from 2020 onwards.

He strongly encouraged Queenslanders on obsolete tariffs to contact Ergon Energy, saying around 30 per cent could save money if they switched to a standard tariff.

"The Queensland government supports all Ergon Energy customers through the uniform tariff policy, which is a subsidy to ensure regional customers are paying similar amounts for electricity as those in south east Queensland," he said. "The government budgeted $462 million in 2018-19 to deliver this policy. Customers on obsolete tariffs who switch to standard business tariffs will benefit immediately."

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Opposition energy spokesman Michael Hart said he had been advised of the position of the foundries, saying audits showed there was no tariff they could move to that was more advantageous.

Queensland Electricity Users Network spokeswoman Jennifer Brownie said irrigators, the dairy industry, sugar mills and industrial users were all in trouble if the government didn't drop tariffs in the state budget next week.

"Small towns are dying because of this," she said.

"Joe Vecchio has gone the whole nine yards on this. His company is the second biggest employer in that council area.

"If Northern Iron and Brass Foundry goes under, it will be devastating."

She said sugar and banana industries were both struggling in the region and they needed the foundry to stay open, by staying on a a transitional tariff.