Hundreds of workers have lost work and many face layoffs, due to factory close downs, blamed on high energy prices. (File photo) Photo: AFP/ PhotoAlto - James Hardy
The human cost of the energy crisis is beginning to mount, with hundreds of workers facing permanent closures or temporary shutdowns at pulp and paper mills in a number of communities.
The blame is being pointed squarely at wholesale electricity prices, which have risen sharply from an average of about $100 per megawatt hour in September 2021, up to about $700 earlier this week.
A shift electrician at Oji Fibre Solutions in Penrose, Maurice Upton said its 75 staff returned from a scheduled maintenance shutdown to a bleak announcement.
"At start-up we got a letter saying they had some news for us, there was a proposal they wanted to make to us and that's how it all unfolded.
"Pretty much the proposal is to shut the plant because of the cost of doing business."
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An E Tū union delegate, Upton said although there had been murmurs about the site's future it still came as a shock to workers.
"They were sort of stunned ... they were just listening. They were basically just given a package and told this is what is proposed. We just have to wait and see.
"I mean they may restructure. There was talk of some restructuring, but it leaves you second guessing as to what could happen.
"If the worst comes to worst they'll shut down in December."
Oji chief executive Dr Jon Ryder told RNZ on Thursday that a number of issues, including electricity costs, were causing the business to lose money.
Electricity supplier Octopus Energy's chief financial officer Margaret Cooney said the wider situation was entirely predictable.
Margaret Cooney, from Octopus Energy Photo: Supplied / Steve Montgomery
"The current crisis is ultimately a symptom of underlying problems with competition in the sector, and there hasn't been the level of investment that's been required, so there's been definitely issues with gas, but we should've seen much more in other forms of generation come to market to fill that void which was inevitable."
She said those currently exposed to spot pricing were hurting, but soon mums and dads would feel the pain too because the energy component of power bills had doubled in price and that would soon be reflected in residential statements.
"You can expect probably a 25 percent to 40 percent increase in your total bill depending on how much energy you use and where you are."
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Margaret Cooney said more robust regulation to allow genuine competition was required in the New Zealand market.
Near Napier, Pan Pac Forest Products has suspended pulp production, mirroring a moved made at Winstone Pulp International's two Ruapehu plants.
Pan Pac managing director Tony Clifford said it had little choice.
"The pulping process is both energy intensive but also trade exposed meaning we have to compete internationally with other suppliers of Winstone Pulp mechanical pulp, so there's absolutely no possibility passing on high power prices into our supply chain. So, we've got no option but to idle or cease production."
He said the move would have a negative flow-on effect in the local economy.
"Pulp mills use considerable amounts of chemicals and if those chemical manufacturers can't supply then they run into issues with idling and being exposed to fixed costs and then there's all of our logistics side of the systems, you know, all of the trucks and fleets that bring logs to the site, product cartage, and then our infrastructure, port infrastructure, products going through the port.
"We've got a pretty integrated supply chain, and when one of the links in the supply chain and when one of the links in the chain fails it certainly ripples up and down those chains, so there's significant consequential impacts.
