They’re an Australian staple but the price of a humble meat pie is rising at one of the country’s biggest bakers, thanks in part to increasing power prices.

Adelaide bakery Vili’s is about to renew its electricity contract and general manager Peter Utry has told 7.30 the cheapest quote is a 22 per cent rise.

“Our energy bills are around the $500,000 mark, and obviously our increase on top of that, well, you know, we’re looking at roughly an extra $100,000 on top of that number,” he said.

The family-owned company has 350 staff and produces about 50,000 pies daily, along with pasties, sausage rolls and sweet treats.

“On a national scale we’re probably, I’d say … the third biggest in Australia with the volume that we produce.”

Their prices are set to rise by 25 cents per pie, which also factors in a rise in labour and other costs.

The pies already retail between $5.50 and $6.90 at present.

Mr Utry said he understood households were struggling with the cost of living, but the business can’t absorb such a big power price increase.

“Look, nobody likes to increase their prices… we certainly don’t take our customers for granted,” he told 7.30. 

Other businesses are also feeling the pain of rising power bills. 

But unlike Vili’s, South Australian ice cream maker Golden North can’t afford to pass on costs to customers.

Operations manager Rick Willis told 7.30 the company renewed its electricity contract in January but the cheapest deal it could get resulted in an almost 50 per cent increase in its power bills.

“The ice cream market in Australia is very competitive. Obviously, we’re working against bigger companies than us, so we can’t put our price up to then lose business. 

“We’ve had to absorb that cost to remain competitive.”

Mr Willis said the company would like to invest in solar, but the outlay is prohibitive — 75 per cent of the company’s electricity use goes towards powering its freezers and fridges.

“That’s running 24 hours a day, 365 days of the year, and essentially runs our whole refrigeration system, which includes our freezers and all of our cooling processing equipment,” he said.

Uncertainty for businesses 

Innes Willox from the Australian Industry Group told 7.30 volatility in the wholesale electricity market was hurting businesses nationwide.

“Wholesale prices are essentially the market that business operates,” he said. 

“Pricing depends on your market, depends on your state, it depends on your sector, it depends on what time of day or night you’re operating. There’s no consistency within that wholesale price that businesses are having to work through.”

The energy market operator said in the June quarter wholesale prices averaged 23 per cent higher than the same period last year. Major generation outages and transmission line works saw extreme price volatility in New South Wales and led to a temporary cap on prices.

Low wind speeds and rainfall led to increases in prices in South Australia, Tasmania, and Victoria but in Queensland, they fell.

AEMO said average monthly wholesale electricity prices had dropped to $45/MWh in September, which would eventually flow on to customers. 

Mr Willox said energy prices spiked in 2022 because of conflict overseas and have moderated somewhat since but are still higher than historical levels.

He said for some businesses, power prices were back-breaking. 

Last week dairy producer Beston Global Food Company cited onerous energy prices and uncompetitive farm gate milk prices as key reasons for entering administration. One hundred and sixty jobs are on the line.

“It’s always heartbreaking when you hear of companies [shutting] their doors because of energy prices,” Mr Willox said. 

“If we start losing local businesses that are energy reliant, we lose the heart and soul of the community that we live in.”

Mr Willox said there didn’t appear to be any big price reprieves on the horizon. The Australian Energy Market Operator has warned there could be a gas shortage as early as 2028.

Federal Industry Minister Ed Husic said his government has put a price cap on gas to secure more supply at reasonable prices.

“We’ve done something that a lot of other governments have not had the guts to do, which is to be able to stand up to the energy companies and to say, in particular, that we would put in place energy price release caps on electricity and gas,” Mr Husic told 7.30.

“We certainly appreciate the size of the challenge and understand certainly the pressures that businesses have been going under, and we want to work with them to alleviate those pressures.”

‘Slow off the mark’ for renewables

While the Coalition is proposing a balanced energy mix of nuclear, gas and renewables, the Albanese government is investing $20 billion to modernise infrastructure, with the goal of more than doubling the share of renewables in the grid to 82 per cent by 2030.

Modelling commissioned by the Labor Party claims that could cut wholesale electricity prices by 26 per cent.

“We are deliberately working very hard to bring in new sources of energy, renewable energy, that will be a cheaper form of energy for both businesses and consumers,” Mr Husic said.

But Mr Willox said those goals would be a challenge to achieve.

“That’s assuming everything goes right in terms of the government’s policy approach, and that involves a lot of construction of renewable energy, of gas peakers, and the building of thousands and thousands of miles of transmission lines,” he said. 

“The cold, hard reality is that we’ve been very slow off the mark to build that infrastructure, and if we don’t build that infrastructure, then we’re not going to see that reduction in power prices that the government is looking to see.”

In a statement, the Shadow Climate Change and Energy Minister Ted O’Brien said Labor’s renewable rollout had stalled and its “reluctance to confront this reality” was leading to a “haphazard management of the electricity system which drives up prices and puts reliability at risk”.

Golden North operations manager Rick Willis hopes power prices will come down in the future, but said the family-based business was also grappling with ingredients, labour and distribution cost rises.

“It is always challenging, especially being based out in the regions, being two and a half hours away from Adelaide, there’s a lot of costs associated with freight to get our product or raw material here, to then ship our product to Adelaide and out to the eastern seaboard,” he said.

He said the company could move to reduce costs but has decided it’s important to remain part of the regional community of Laura.

“We employ 10 per cent of the population. So for a business like this not to be here would be devastating for a town like Laura, and there’s hundreds of businesses that are in the same position all around Australia.”

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