A HUNTER manufacturer is staring down the barrel of a $1.2 million blow-out in its electricity bill over the next three years, a hike it fears will land a "killer blow" to its bottom line.
Milltech, a Tomago-based company which processes steel bars, has produced documents which show it is looking at a jump of at least 160 per cent on its last contract, after putting its electricity requirements until the end of 2020 out to tender.
The development has sparked a fresh row over energy policy in NSW, with Labor seizing on the bill as evidence of the failure of the privatisation and deregulation of the industry over the last three years.
During a tour of Milltech's Tomago warehouse on Tuesday, shadow energy minister Adam Searle accused the state government of allowing power prices to "gallop completely out of control.”
Mr Searle warned that continued price hikes would have a crippling effect on Hunter manufacturers like Milltech, who had no choice but to absorb the costs in order to remain competitive.
But NSW Energy Minister Don Harwin returned serve, accusing his Labor counterpart of being "grossly misleading" over the source of the spiralling prices.
According to Mr Harwin, the rising energy bills were due to national factors, including higher gas prices and diminishing supply with the closure of large coal-fired power stations in Victoria and South Australia.
"This has been acknowledged by all leading experts in the energy field and even by a NSW Labor spokesman in parliament," he said.
Milltech is the last company of its kind in Australia, and warned soaring power prices were hampering its ability to compete with cheap overseas imports.
"We want the government to give us a level playing field," managing director Fred Reis said. "We could live with some increases in electricity, but not this killer blow."
Mr Reis has built his business, which sources its steel from One Steel, from the ground up over 25 years.
By finding efficiencies, he has been able to expand his workforce to 65 employees.
But on top of rising steel prices and rents, he must now account for a surge in power costs from five to 13 cents per kilowatt hour.
"It's all coming in on top of us and making life very difficult," Mr Reis said.
"While we've been putting people on in the last 12 months, we might be looking at putting people off again, which I hate to do."
Member for Port Stephens Kate Washington said it was a common misconception that manufacturing in the Hunter was dying, when it was actually a “thriving” sector and major employer.
“The impact on electricity prices is often framed around discussions on residents, but the potential impact for us is really significant in terms of our manufacturing capacity,” she said.
In June Labor pledged that, if elected, it would rein in prices through the re-regulation of the energy market.
“There’s a whole range of market interventions that we can put in place that we’ll flesh out over the next few months,” Mr Searle said.
Tony Wood, energy program director at the Grattan Institute, agreed that re-regulation could put downwards pressure on prices.
However he argued it was a “very long bow to draw” to suggest that privatisation of the networks had played a role in the present situation.
“If anything, the evidence we’ve seen is that the privatisation ... in the other states has reduced costs,” he said.
The Milltech revelations come in the same week the Newcastle Herald reported that a large-scale solar farm was being planned for the site of the Vales Point Power Station, due to be shut down in 2029.
Mr Wood said as old, low-cost power stations were retired, it was inevitable that prices would climb, regardless of whether they were replaced with renewable or coal-fired power.
Mr Harwin said the state government was “working hard” to put downward pressure on prices but stressed that reform needed to be undertaken at a national level.
For Mr Reis, change can’t come soon enough.
“I remember thinking about 10 years ago, we’re very fortunate in this country we’ve got cheap energy,” he said. “And now what have we got? A bloody mess.”