Power price draft determination a shock for farmers

By Brian Tessmann, QDO President

The recently released draft determination of 8 to 14 per cent retail electricity price hikes for small business in 2016/17 has shocked many agricultural consumers. 

For an average dairy shed consuming 60000kWh per annum on tariff 62 the bill will increase by about $1280 per annum. This QCA draft determination will affect consumers in the Ergon distribution area, directly contradicting comments by the Premier and the Energy Minister last year that Queenslanders would see price stability.

The QCA has blamed the increase on the cost of Renewable Energy Certificates and a tightening supply/demand situation. Apparently this means now that LNG export has ramped up there has been an increase in demand for electricity to compress gas for offshore movement. 

If so this is something that should have been easily foreseen by government and regulators and not constitute a surprise to them now. 

What is clear is that increased electricity prices have nothing to do with power generation cost as the coal price is similar to 2007 levels and renewable sources are also competitive, even considering the fact that they only account for a small part of Queenslanders’ overall power bill. 

The power cost increase revolves around inefficient transmission costs combined with the dividend paid back to government on what are clearly over valued power assets. This has meant that the average dairy farmer’s power bill has gone up by around 110pc since 2007.

QDO has been working with Queensland Farmers’ Federation (QFF) to raise awareness of the impacts these internationally uncompetitive electricity prices are having on industries’ profitability and productivity. 

Clearly the electricity industry needs a complete review and overhaul if we are to achieve internationally competitive prices. 

QDO and QFF are aware that farmers are increasingly questioning whether they can afford to depend on grid connection in the future.