Australians hit with $7b power slug says BlueScope

Australians hit with $7b power slug says BlueScope


Paul O'Malley, CEO of BlueScope - after their results. Monday 20th February 2017 AFR photo Louie Douvis .

Paul O'Malley, CEO of BlueScope - after their results. Monday 20th February 2017 AFR photo Louie Douvis .

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Spiralling gas and electricity prices have cost Australian energy users more than $7 billion a year in the last two years, says the outgoing head of Australian manufacturing heavyweight BlueScope

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Spiralling gas and electricity prices have cost Australian energy users more than $7 billion a year in the last two years, says the outgoing head of Australian manufacturing heavyweight BlueScope

BlueScope managing director Paul O'Malley said his company faced electricity prices in Australia three times higher than in America, and repeated his call for the establishment of a "baseload energy target" for the nation.

"If you look at the United States and compare it to Australia we have a similar percentage of dispatched renewable energy, about 14 or 15 per cent," said Mr O'Malley.

"(But) our electricity prices today are three times as high in Australia as they are in the US, and I can compare directly what we're paying in our business in Australia, versus the US."

Mr O'Malley made the comments to media after giving his last address to a BlueScope annual general meeting, where he devoted considerable attention to Australia's energy "crisis".

"The increase in domestic gas prices since 2015 has cost Australian gas users approximately $3.5 billion per annum. For electricity, the cost to users of rising electricity prices is over $3.7 billion per annum," he said.

Mr O'Malley, who retires in December after a decade leading the company, also warned that "without an adequate 10 year transition plan that addresses electricity affordability and reliability - we are condemned to even higher prices and more reliability issues".

Australia could not afford to narrow its focus to only "future initiatives and possibilities - the Finkel recommendations, renewables-only, the future smart technologies - because they aren't here yet," he said.

"If Australia is to retain its economic competitiveness, it also must focus on the basic stuff - that is, fundamental baseload energy that powers our homes, factories, schools and hospitals," he said.

Mr O'Malley told the media after the company's meeting that gas had to play a greater role in the nation's energy mix after the closure of the Hazelwood power station in Victoria.

"To have a competitive economy we need a competitive energy system. And my simple philosophy is there is an easy fix. We need more gas in Australia and we need to ensure that baseload is available, using whatever technologies can work, because without baseload you cannot have reliable and affordable power," he said.

"We have to have in my view, first, a baseload energy target. And the baseload energy target can be whatever technology supports it. And I'm of the view that at some point in the future renewables will step in to being a baseload energy capability, but they are not today and I do not believe that they will be for a good 10 years if not longer," he said.

Speaking separately at a media event in Melbourne, KPMG Australia chairman Alison Kitchen threw the firm's weight behind putting a price on carbon.

"We've seen a vacuum of proper policy settings creating crises," she said.

"Frankly, I think both the decision around Liddell (power plant) and the discussions between the government and energy producers around the supply of domestic gas are market failures that have had to move to crisis measures to sort them out," she said.

KPMG chairman Alison Kitchen.

KPMG chairman Alison Kitchen. Photo: Supplied

Ms Kitchen said this failure had occurred at both a state and federal level and had occurred over an extended period of time and was the responsibility of both sides of parliament.

In a presentation at the AGM BlueScope also gave a short update about an Australian Competition and Consumer Commission investigation into potential cartel conduct by BlueScope in the period from late 2013 to mid 2014.

"BlueScope has co-operated, and continues to co-operate, with the ACCC's investigation. The ACCC's investigation is ongoing. The company is not in a position to make any further comment at this time," it said.

Mr O'Malley would not elaborate on the ACCC investigation after the meeting.

The company also confirmed its first half guidance released to the market in August.

The story Australians hit with $7b power slug says BlueScope first appeared on The Sydney Morning Herald.

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