Victorian hospitals and health services reeling from electricity price bill shock

Hospitals and health services are being slugged with massive power cost increases as they struggle to balance budgets already under strain.

The cost of electricity has almost doubled for some services after a new 24-month contract came into place last month.

Victorian government announces renewable energy plans

Two new solar plants will power Melbourne’s tram network and the Victorian government announces a scheme to provide enough renewable electricity for hundreds of thousands of Victorian homes.

Health services are facing an estimated $44 million increase as part of the new electricity contract, according to Health Purchasing Victoria, which is responsible for securing bulk power deals.

It cited increased retail charges and the impact of volume growth.

Health Purchasing Victoria wrote to the sector in June about the electricity increases, warning it could not control volatile market conditions but was looking at ways  to help health services reduce energy costs.

From January the health sector will be hit with another rise in utilities bills when the current gas contract expires.

Some major hospitals have moved to insulate themselves against huge price rises by producing their own power. But other health services are wondering how they will absorb the soaring costs.

Cobdenhealth​ chief executive Leonie Rooney said her service’s monthly electricity bill had risen from about $4000 to more than $7000.

“I’m certain we’re not alone in this situation,” she said. “It’s going to test our viability.”

The rural service provides aged care, an urgent-care centre and allied health services, including a heated pool.

Under a worst-case scenario, Cobdenhealth would have to consider shutting its pool, which offers physiotherapy, rehabilitation, swimming lessons and exercise programs, Ms Rooney said.

“Most small rural health services aren’t making money or breaking even.”

The bill for another small regional health service showed its monthly electricity costs had risen from about $8400 to just over $15,000.

A spokesman for Northern Health, which operates the busy Northern Hospital in Epping, also confirmed it was experiencing increased utility costs.

He said the hospital was introducing sustainability strategies to mitigate the price rises but insisted there would be no compromise on safety.

In 2015-16 the cost of electricity to the public health sector was $67.3 million.

Opposition health spokeswoman Mary Wooldridge said families and businesses had been hit hard by soaring utility costs and now the health sector was under “extreme strain”.

“Under Daniel Andrews, hospitals literally can’t afford to pay these bills,” she said.

A spokeswoman for Health Minister Jill Hennessy said the government was working with hospitals to tackle demand and cost pressures.

She said the government was spending more money on health services and programs, accusing the previous Coalition government of cutting funding.

Victorian hospitals would receive an extra $665 million this year, she said..

Health Purchasing Victoria, an independent statutory authority responsible to the health minister, confirmed there were 76 “mandated” health services in Victoria that were required to buy goods and services, including electricity, via a collective contract. A further 13 “non-mandated” services also used Health Purchasing Victoria’s contract.

The Victorian government introduced proposed legislation last week that sets out its target of 40 per cent renewable power by 2025.

It cited a forecast by Ernst & Young predicting that average household prices would come down by $29 a year but did not release the modelling at the announcement.  

In Parliament last week Nationals MP for Lowan Emma Kealy said Wimmera Health Care Group in Horsham expected power prices to rise by $500,000 this financial year.

“If a hospital is hit with an increase in electricity costs, they simply do not have the budget to cover it,” she said. 

Leave a Reply

Your email address will not be published. Required fields are marked *

one × five =