High energy costs places Bridgewater manufacturing plant at risk

BRIGHTON Council says excessive energy charges are placing a highly efficient local manufacturing plant at risk and has called on the Government and Opposition to bring the charges more into line with national costs.

Brighton Mayor Tony Foster said the Polyfoam Australia Pty Ltd facility at Bridgewater was the most modern and energy efficient plant of its type in Australia, yet gas and electricity charges were currently up to 258 percent higher than those interstate.

Manager Greg Riley with Adam Richardson, right, in the Polyfoam factory which supplies polystyrene containers and material for the aquaculture, agriculture, building construction and medical sectors.

The Polyfoam operation supplies polystyrene containers and material for the aquaculture, agriculture, building construction and medical sectors. It was relocated from Franklin to Bridgewater in 2007 to expand production and principally to access cheaper natural gas to fuel its operations.

Cr Foster said unfortunately, the steep rise in the price of natural gas and electricity had impacted on the company’s profitability to the point that the owners were seriously considering whether to continue manufacturing in Tasmania.

Polyfoam employs 16 people directly and supports a range of Tasmanian contractors providing transport, maintenance, waste removal and other support services.

“I am advised that a comparison of energy costs for Polyfoam’s Victorian and Tasmanian plants for August 2013 shows the cost of gas at Bridgewater at $19.57 a gigajoule and Melbourne just $7.59 a gigajoule. Comparable electricity charges were $0.1288 a kilowatt hour in Melbourne and $0.2264 a kilowatt hour for the Bridgewater plant,” Cr Foster said.

“The company has also been advised of charges for its Melbourne operation for the next three years with the gas price rising to $8.19 per gigajoule, still less than half the current Tasmanian price.

“It is understood that the government negotiated a ‘take or pay’ gas deal and with the Bell Bay Power Station no longer in operation, prices for other users have risen substantially to compensate.

“This is a serious issue and it is difficult to see how any Tasmanian business can compete when the energy playing field is so out of kilter.

Cr Foster said Polyfoam had approached the State Government seeking some relief and had provided comparisons between the Melbourne and Tasmanian costs.  The only response received was advice to contact the Department of Economic Development to see if financial help could be obtained to purchase a bio-­‐fuel boiler

“This makes the hundreds of millions of dollars spent on bringing natural gas to Tasmania seem like little more than a joke. The government response is most unsatisfactory.

“What value is the availability of natural gas for business, as well as householders, if it is too expensive to use and worse still, threatens business viability?

Cr Foster said Polyfoam was also disadvantaged by the cost of transporting raw materials to Tasmania which did not qualify for freight equalisation, while competitors could import their products and receive the freight subsidy.

“The situation has placed Polyfoam and probably many other Tasmanian businesses at risk and in the election climate both the State Government and the Opposition as the alternative administration must commit to bring Tasmanian energy prices into line with those   interstate.

“The tragedy of this is that Polyfoam’s Bridgewater plant is under threat from costs beyond its control, yet it is the most efficient and modern of all the company’s operations.

“The politicians cannot hide behind the Economic Regulator as Tasmania can ill afford to lose businesses and employment,” Cr Foster said.

*See also Mayor’s column on this issue*