Hunter-based manufacturer Peter McKinnon has a simple question: why has the cost of the power that he buys from the grid increased by about 400 per cent yet his solar feed-in tariff has barely changed?
Mr McKinnon employs about 30 people at his Beresfield business Omnia, which develops and manufacturers omni-directional wheels.
Like many businesses, he has been hit by a perfect storm of supply chain cost increases and delays, a shortage of skilled labour and now skyrocketing power costs.
The Newcastle Herald has been told some of the region's largest energy intensive industries have temporarily ceased production in recent weeks due to soaring spot prices for power.
Mr McKinnon said the recent power price spikes have been particularly hard to swallow because he invested in a 100 kilowatt solar system about a year ago in an effort to reduce costs.
While the power he buys from the grid has increased by more than 400 per cent, the feed-in tariff for power that he delivers back has only increased by 112 per cent.
"What galls me most is how does AGL or someone like that increase their charge rate by over 400 per cent and increase the power they are getting off you by only 112 per cent," he said.
"If the price of power has changed that much why isn't there parity at least on a percentage basis? Someone is gouging somewhere."
While Mr McKinnon's is now paying about $3000 a month extra for power than he was a few months ago, he says he is unable to pass the costs on to his international customers.
"We still have to ship our products. We are going to have to hike it (prices) eventually but we have to be careful because our largest customer isn't going to take it well".
In addition, labour costs and shortages have constrained the business from growing.
"We have got the work and we want to put more people on but with the cost increases how do we do that?," Mr McKinnon said.
"You have got an award rate that is $22.60 at the moment and you are struggling to get people at $27-$30 now."
Business Hunter chief executive Bob Hawes said the cost of power was the top concern for many Hunter businesses.
"There's no doubt, rising energy costs pose a major threat to businesses across Australia and in the region, and prior to the pandemic, energy costs were a consistent top priority for business owners as highlighted in our quarterly business conditions surveys," he said.
"Businesses have contacted us directly, worried about the current circumstances around billing and supply contracts to the extent there is concern the rise in cost of energy will make production unviable. Businesses shouldn't be expected to simply absorb such an significant cost increase to a service and supply that is essential to business operations."
Business NSW identified limited supply capacity, aged power stations and limited gas pipeline capacity from Queensland to southern states as threats to the state's energy security as part of its 2019 Thinking Business Report 'Running on Empty'.
But the situation has been made worse by the war in Ukraine and the current cold weather.
"We understand the immediate impacts of spiking gas and electricity prices will impact big commercial and industrial users first. But it won't take long before impacts are felt by smaller businesses, and of course consumers.
"As with all cost pressures, it's harder for small businesses to absorb rising costs, and not have to pass those on to their customers."
