Urgent action is needed to fix the nation's energy market "catastrophe" or the economy risked blackouts, business closures and job losses, the boss of manufacturing heavyweight BlueScope has warned.

"Six months ago, at our half-year results presentation, I warned of an imminent energy supply catastrophe. This catastrophe is now happening," BlueScope chief executive Paul O'Malley said on Monday.

A predicted near doubling in BlueScope's energy costs was one of the key reasons for a softer-than-expected outlook, which prompted investors to tear 21.76 per cent from the steel maker's share price on Monday.

BlueScope predicted its underlying earnings would drop 20 per cent in the current half compared to the second half of the 2017 financial year as its energy bill increased to an estimated $145 million, or 75 per cent, between 2016 and 2018.

Mr O'Malley said the solutions to the crisis were "simple" - the existing baseload fleet, especially coal-fired stations, needed to be kept running until there was a renewable energy equivalent and more gas needed to be made available for domestic use.

"We have a very fragile baseload mix, We must maintain that baseload energy that we have today or we will have more blackouts, more businesses will fold because of higher energy costs, jobs will go with it," said Mr O'Malley whose retirement at the end of this year was also announced on Monday.

The problem was that there was no incentive for coal-fired power station owners to invest in their plants when policy could change quickly that would see that investment wiped out, he said.

"Every bit of energy policy over the past 10 years has been aimed at penalising our baseload plants. Incentivising baseload to shut is just plain stupid, incentivising baseload to stay open is absolutely essential."

He said prices in the wholesale electricity market had spiked sharply since the closure of the Hazelwood coal-fired station in Victoria.

"The economic cost to the country of getting our baseload incentives wrong has been awful and getting higher," he said.

Mr O'Malley said payments needed to be put in place to keep baseload plants operating until renewable energy alternatives were available for at least the next 10 years.

In a statement federal Energy Minister Josh Frydenberg said the government understood that baseload power "anchors our electricity system".

"That is why we have tasked the Australian Energy Market Operator to identify the future baseload power needs of the grid, particularly in light of the scheduled closure of Liddell [power station\ in 2022."

Mr O'Malley said there also needed to be more done to boost production of local gas and failing that then interventions should be made to divert gas from export towards domestic uses.

"Australia and its consumers must come first," Mr O'Malley said.

The company also revealed that it is under investigation by the Australian Competition and Consumer Commission for potential cartel conduct.

The investigation relates to the supply of steel products in Australia and "involved a small number of BlueScope employees" and Mr O'Malley said the company was co-operating with the ACCC.

"BlueScope is committed to competing fairly and complying with all laws that apply to our operations but in the view that we need to be absolutely transparent with the market we have called this issue out," he said.

Mr O'Malley declined to comment when asked if BlueScope had immunity as part of the investigation or whether it had self-reported to the ACCC.

Underlying profit rose 112 per cent to $650.8 million, based mainly on cost cutting. However, the result was below market forecasts of $682 million.

Its final dividend of 5?? a share was also below market forecasts for 7??.

However, BlueScope said it would return a further $150 million to shareholders through an on-market share buyback.

Mr O'Malley will be replaced by the head of the company's Australian arm, Mark Vassella.

with Reuters