‘Screwing up the country’ JP Drake blames rush to renewables for power hikes crippling businesses

A prominent supermarket boss has taken aim at the country’s “rush to renewables”, saying the rapid shift was to blame for power price hikes. 

Drakes Supermarkets boss John-Paul Drake has blasted the “rush to renewables” for soaring power bills which threaten the company’s growth.

Drakes, which employs more than 6000 people, has seen energy costs rocket from $10m in 2023 to an estimated $14.5m this year and issued a grim warning about renewables “screwing up the country.”

Drakes was among iconic South Australian companies surveyed by The Advertiser to find the impact of crippling power bills — it revealed they are grappling with mammoth increases of up to 60 per cent, with one saying it has been forced to pass on costs to customers.

JP Drake at Drakes Wayville, on June 25th, 2024. Picture: Tom Huntley

Mr Drake said the business needed to remain in competition with supermarket giants Coles and Woolworths which meant they could not increase the cost of goods to offset their rising power bills costs.

He believes part of the reason for spiralling bills is Australia’s “rush” to shift to renewables.

“I think this is the reason we are paying so much more for electricity, because we are trying to go all to renewables,” he said.

“I think we have got to be very cautious about trying to be green and realise how much it has screwed up the whole of the country.”

The supermarket chain has opened three new sites across the state in the past year but Mr Drake said without the burden of hefty power bills, they would be able to do more.

“It means we don’t grow as much, which means we can’t employ more people, which means we can’t buy more sites,” he said.

“It causes us to be very cautious about how we move forward, it makes us not as optimistic about what we can do.”

Businesses have told The Advertiser they are seeing significant jumps in their power prices when their contracts wrap up and they go to market for a new agreement.

Jon Seeley Group Managing Director looking over the manufacturing floor. Picture: Russell Millard Photography

Seeley International, which produces airconditioning and gas heaters, also saw an almost 60 per cent increase in their power bills.

Group managing director Jon Seeley said their electricity use has remained fairly steady but their bills have soared.

Mr Seeley said the company has had to increase prices to make up for the growing power costs.

“We have to regularly review our cost base, including power prices and wages and all other costs and we do have to pass on price increases through to our customers,” he said.

But he added they try to do this “as little as possible” and typically follow broad inflation.

To mitigate growing power costs, Mr Seeley said the business has sought to modify its electricity use which includes investing in new, more efficient equipment.

He added they were looking at including solar in their factory extension works at Lonsdale but as a company with a “relatively energy intensive manufacturing process, even if we cover our roof with solar panels, it doesn’t make a huge difference.”

According to an SA Business Chamber report, South Australia has experienced the biggest increase in electricity bills in Australia.

 

Winemaker Richard Angove at the Tasmanian vineyard. Picture: Kevin Daly

Angove Family Winemakers joint managing director Richard Angove said they have seen around a 45 per cent increase in their power bills after they went to market for a new energy contract last November.

In recent years the company has approximately halved its grape intake which has significantly reduced the company’s energy use. However Mr Angove said that has not been reflected in their growing power bills.

He said energy prices were an economy-wide problem leading to inflationary pressures for businesses across the board.

“The business environment has never been as tough, possibly with the exception of world wars,” he said.

“However, we’re resilient and we do have plans in place to create efficiencies where we can.

“We’re currently investigating more solar on our vineyard … we’re looking at improvements for better efficiencies.

“We’re always looking at our product portfolio, ensuring that our product mix is right, delivering the highest margins for us.”

Golden North’s Peter Adamo with some ice cream.

Meanwhile, Golden North Ice Cream has seen a 48.6 per cent increase in their power bills.

Managing director Peter Adamo said in 2023, their average monthly bill was $34,000. This year, it comes around $50,000 per month.

“It’s a big cost due to refrigeration. (These are) challenging times, especially operating in a regional town in the Mid North, it just puts more cost pressures.”

Mr Adamo said while they haven’t passed on those increases to customers yet, if prices continue to go up “we won’t be able to absorb it, so there will be price increases”.

Energy Minister Tom Koutsantonis said the government was “acutely aware of the pressure on families and businesses brought by high energy prices, which are a symptom of policy failures at both national and state level dating back many years.”

“I had a briefing today from the chair of the Australian Energy Regulator who made it clear that it is not renewables but a shortage of gas that is driving up prices nationally,” he said.

“This government makes no apology for working hard to encourage new investment in energy projects including wind, solar, gas and of course hydrogen, because as these increase it will ultimately help deliver more affordable and reliable power to South Australians.

“Further, we are providing more relief to small businesses – just last week opening applications for grants of up to $50,000 to help reduce energy bills, under Round 2 of our $154m Economic Recovery Fund.

“Because of the disastrous privatisation of the electricity system by a previous Liberal administration, the state government has no direct control over setting electricity prices, with the structure of energy contracts, including fees, tariffs and any discounts, decided by individual retailers.”

Five year old twins Korban and Zayt Mutton from Rostrevor enjoy Giant Twins with mum Samantha at the Royal Show. Picture: Brenton Edwards

Climate Change and Energy Minister Chris Bowen’s spokesman said the government was “working hard to bring down energy prices by delivering cheap reliable renewables into the grid, firmed by gas, batteries and pumped hydro.”

“After a decade of delay, denial and dysfunction under the former government South Australians are now paying the price for an outdated grid, reliant on expensive coal and exposed to international energy pressures,” he said.

“Meanwhile we are also delivering $300 of energy bill relief to every household and one million small businesses will get $325.”