Power cost re­lief for ir­ri­ga­tors but more needed

Australian Farmers & Dealers Journal - - WATER/IRRIGATION -

THE NSW Ir­ri­ga­tors' Coun­cil has wel­comed the Aus­tralian En­ergy Reg­u­la­tor's fi­nal de­ci­sion on the re­gional net­work's electricity charges for the next four years, but says more needs to be done to en­sure that ir­ri­ga­tors are get­ting long-term re­lief from ris­ing electricity costs. The coun­cil's pol­icy man­ager Ste­fanie Schulte said the coun­cil was pleased to see that the AER has stood firm against crit­i­cism of its draft de­ter­mi­na­tion by the NSW Govern­ment and the net­work companies, and only ap­proved a to­tal rev­enue al­lowance of $3.8 bil­lion, com­pared to the $5.5 bil­lion re­quested by NSW's re­gional net­work, Es­sen­tial En­ergy. The AER ex­pects the de­ci­sion to re­duce power bills for NSW re­gional cus­tomers next year by 11.9 per cent. Ir­ri­ga­tors will keep a close eye on their net­work charges to en­sure that the gains are not off­set by fur­ther in­creases in re­tail prices. "Electricity prices for ir­ri­ga­tors have in­creased by over 300pc over the last five years, mainly due to net­work charges. Those price in­creases are un­sus­tain­able and some­thing had to be done to ad­dress this cost ac­cel­er­a­tion for re­gional cus­tomers," Ms Schulte said. “Ir­ri­ga­tors are price tak­ers in in­ter­na­tional com­mod­ity mar­kets for their food and fi­bre prod­ucts, so they are not able to ab­sorb such ex­ces­sive electricity price in­creases, and power costs have be­gun to un­der­mine their vi­a­bil­ity." Ms Schulte said the AER had an­swered what was a to­tally un­re­al­is­tic re­quest by Es­sen­tial En­ergy for fur­ther rev­enue in­creases, set­ting a rev­enue al­lowance that should bring some wel­come re­lief to re­gional power users. “Many ir­ri­ga­tors have been fac­ing the dif­fi­cult de­ci­sion of ei­ther switch­ing off their pumps and pres­surised ir­ri­ga­tion equip­ment or go­ing off the grid. We hope that the AER de­ter­mi­na­tion will pro­vide a third op­tion for ir­ri­ga­tors in NSW - stay­ing on the grid and re­main­ing fi­nan­cially vi­able," Ms Schulte said. "It is very im­por­tant for both power users and for the net­work that we don't end up in a electricity net­work 'death spi­ral' where we have an ex­pen­sive power net­work with a large num­ber of stranded power as­sets and a de­clin­ing cus­tomer base bear­ing un­sus­tain­able in­creases in power prices. “The AER de­ter­mi­na­tion is a first step in the right di­rec­tion, how­ever we need to en­sure that it trans­lates into lower on­go­ing power costs for ir­ri­ga­tors in NSW." Ms Schulte said the bat­tle to achieve bet­ter power tar­iffs for ir­ri­ga­tors and other pri­mary pro­duc­ers was far from over. She said re­cent changes to the electricity rules mean net­work tar­iffs will from now on need to be 'cost re­flec­tive', which re­mains a se­ri­ous con­cern to ir­ri­ga­tors in re­gional NSW be­cause they of­ten use large amount of power over a short time pe­riod and do not have the op­por­tu­nity to utilise off-peak tar­iffs. This means that with­out eas­ier ac­cess to off-peak power rates ir­ri­ga­tors re­main very vul­ner­a­ble to fu­ture cost hikes. "What ir­ri­ga­tors re­ally need is flex­i­bil­ity, with electricity tar­iffs that suit their re­quire­ment to draw power when sea­sonal con­di­tions dic­tate wa­ter needs. They need tar­iffs that are based on over­all an­nual power use, not cost re­flec­tive prices for short pe­ri­ods of use," Ms Schulte said. NSWIC has re­stated its com­mit­ment to work­ing with Es­sen­tial En­ergy, the reg­u­la­tors and pol­icy mak­ers to find a sus­tain­able electricity cost so­lu­tion for ir­ri­gated food and fi­bre pro­duc­ers in NSW into the longer term. Mean­while, the coun­cil has ex­pressed dis­ap­point­ment with the Fed­eral Govern­ment's En­ergy White Paper - point­ing to the paper's lack of recog­ni­tion of the en­ergy use pat­terns and cost pres­sure on ir­ri­ga­tors. Ms Schulte said that while the pre­vi­ous En­ergy Green Paper ac­knowl­edged the par­tic­u­lar cir­cum­stances of ir­ri­ga­tors who have lit­tle flex­i­bil­ity in changing their en­ergy us­age pat­terns, the White Paper is silent about ir­ri­ga­tors and other ru­ral users' en­ergy chal­lenges. "NSWIC has em­pha­sised on many oc­ca­sions that ir­ri­ga­tors who utilise electricity are ex­tremely vul­ner­a­ble to price in­creases and reg­u­la­tory changes be­cause of the in­flex­i­bil­ity in their electricity use. We had ex­pected that the White Paper would also recog­nise this," she said. The coun­cil said it was par­tic­u­larly con­cerned about the Fed­eral Govern­ment's sup­port of cost re­flec­tive tar­iffs. De­spite the White Paper com­ment that 'most con­sumers will gain from cost re­flec­tive tar­iffs', Ms Schulte said the was gen­uine fear within the ir­ri­ga­tion sec­tor that this will sim­ply lead to even higher electricity prices be­cause ir­ri­ga­tors are heavy power users over short pe­ri­ods, and have lim­ited op­por­tu­ni­ties to ac­cess off-peak power tar­iffs. "NSWIC sup­ports the White Paper's ob­jec­tive of keep­ing prices down, how­ever we can­not see how this will be achieved for the ir­ri­ga­tion sec­tor and other agri­cul­tural sec­tors, with­out tar­iffs specif­i­cally de­signed for agri­cul­tural in­dus­tries us­age pat­terns,” she said. “Ir­ri­ga­tors can ei­ther use their pumps to wa­ter their crops when the weather dic­tates or switch off their pumps and pres­surised ir­ri­ga­tion equip­ment and walk away. There is no 'in be­tween' and cost re­flec­tive tar­iffs are not the an­swer." "Electricity prices are al­ready un­sus­tain­able for a large num­ber of ir­ri­ga­tors in NSW and if there are fur­ther cost in­creases it will force even more grow­ers to go off the grid. The end re­sult will be a death spi­ral of an ex­pen­sive power net­work with a large num­ber of stranded power as­sets and a de­clin­ing cus­tomer base from which net­work costs can be re­cov­ered - lead­ing to even steeper cost in­creases for those re­main­ing on the grid."

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