National energy security push by manufacturing chief

The peak manufacturing body is appealing to states and territories to support the government’s signature energy policy.

Manufacturing Australia chairman James Fazzino.

The peak manufacturing body representing a sector that ­employs nearly one million Australians is appealing to states and territories to support the government’s signature energy policy.

Manufacturing Australia chairman James Fazzino will today urge the states not to “go it alone” on the national energy guarantee as Malcolm Turnbull seeks to keep the policy alive amid a limited backbench push for the government to intervene in the market and build a new coal-fired power station.

State and territory energy ministers will meet on Friday to go over the next stage of the NEG’s design, with the federal government hoping to secure final state agreement for the package as soon as August.

Mr Fazzino said it was critical to secure a framework that could provide reliable supply and ­affordable power while also ­reducing emissions in line with Australia’s international obligations.

“I urge our state governments ... to work together around a single, workable, energy policy platform, seeking improvements where necessary, but not abandoning the need to balance price, reliability and emissions reduction,” he said. “We shouldn’t go back to the drawing board on this. Australia has already lost too much manufacturing investment because of poor energy policy and market dysfunction.”

The rule of thumb for manufacturing companies is that wholesale energy costs makes up about half their power bill compared with about one-third for households.

Energy Minister Josh Frydenberg has cited modelling for the Energy Security Board suggesting the NEG will see an average ­reduction of 23 per cent in wholesale prices from 2020 to 2030.

Chris Taylor, the chief executive of Rheem Australia, the ­nation’s largest producer of water heaters, yesterday said the NEG offered the “best opportunity so far presented to deliver energy ­security, energy affordability and emissions reductions”.

“We believe it is essential that the principles of ‘least-cost generation’ and ‘market transparency’ are embedded in all aspects of the program as it is further developed,” Mr Taylor said.

Rheem said its 2018 power costs were more than 50 per cent higher than they were last year, while gas costs had risen more than 45 per cent.

Martin Brydon, chief executive of Adelaide Brighton, a cement and building sector manufac­turer and one of the largest users of electricity in Australia, said the business was “heavily impacted by high electricity costs and ­reduced reliability of supply”.

“It is now time for all parties to start working together to remedy this situation and we believe the national energy guarantee provides an opportunity to do that,” he said.

Rob Sindel, managing director of building products producer CSR, a shareholder in the ­Tomago aluminium smelter near Newcastle, saidit was “time to put politics to one side”.

Mr Sindel said CSR’s building products business had seen an ­increase in its electricity cost of $30 million in the past two years, warning that failure to resolve the energy crisis would result in “more manufacturing potentially shutting down in Australia over a period of time”.

Mr Frydenberg said there had been a significant improvement in wholesale prices in the past four weeks compared to the same time last year. In the week to last Friday, the price was $79MW/h compared to $112MW/h last year, and that, over the past month, the price was $75.46MW/h, down from $116.35MW/h last year.

This amounted to a reduction of 35 per cent, with Mr Frydenberg saying the cost reductions should be passed on to energy consumers by retailers.

Mr Frydenberg said it was “very significant” that Australia’s largest manufacturers had come out in support of the NEG.

“It’s now up to the states and territories to put aside ideology, work together in the national ­interest and seize this historic ­opportunity to deliver a more ­affordable and reliable energy system,” he said.