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As businesses try to cope with rising inflation, staff shortages and supply constraints they have now been hit with the collapse of one of the east coast’s largest energy suppliers.
Businesses will be facing even greater energy pressures with the collapse of Weston Energy, said Australia’s employer association, the Australian Industry Group, and it has called on the federal government to respond.
The group’s chief executive Innes Willox said the cessation of gas trading by Weston Energy plunges hundreds of businesses across eastern Australia into uncertainty around their energy bills and is a warning of more pressures to come on business and households from high energy prices.
“Eastern Australian gas prices have surged in the last month, following global gas markets to unprecedented highs of $30-40 per gigajoule. Two years ago, industry considered $10 per gigajoule to be worryingly expensive,” he said.
“Electricity prices have likewise exploded as the global coal price inflates generators’ fuel costs in NSW and Queensland. Power futures have doubled over the past year and for NSW and Queensland are well above the highs of 2017-19. The war in Ukraine is the biggest factor at play.”
Mr Willox said these dramatic market movements have created the risk that more energy retailers will be caught out in the months ahead that will then put energy users at risk.
“In the short term it is critical that the Retailer of Last Resort arrangements operate smoothly and swiftly. Businesses contracted with Weston Energy need to know what is happening and they need to be protected from acute shocks,” he said.
“The wider issue is that the underlying energy price rises will have a huge impact on businesses and households.”
Mr Willox said the federal government needs to formulate a “convincing strategy” that will strengthen and futureproof energy supply and energy demand.
“The energy status quo has become unsustainably expensive, quite apart from the climate imperative,” he said.
“But while the transition to new and renewable energy will help over time, it could easily run aground amid snarled global supply chains and disquiet in the communities around new energy megaprojects.
“The next few years look very difficult for energy users. It is urgent that the new Government bring together energy users, the States, energy regulators, energy suppliers, and other stakeholders to find a way through.”