2016-17 Queensland electricity pricing determination
On 31 May 2016 the Queensland Competition Authority released its final determination for electricity pricing in 2016-17.
The determination includes a 12.3% hike in transitional irrigation tariffs to be applied from 1 July 2016.
Growers who irrigate their sugarcane have now seen cumulative price rises of 120% since 1 July 2007 meaning many are not watering crops enough to get optimum production, borrowing money from banks to pay power bills and actively investigating alternative sources of energy.
Read the CANEGROWERS media release about the latest price rise here.
On behalf of members CANEGROWERS has been making submissions into various reviews almost every month for the past three years with one consistent message. There must be a re-think of the whole electricity pricing structure with scrutiny, in particular, of the network costs which are applied to users and make up the biggest component of electricity costs.
In its submission to the Queensland Competition Authority Draft Determination - Regulated retail electricity prices for 2016-17 CANEGROWERS recommended that the QCA review and substantially reduce notified retail prices in its final determination, to take into account the adverse economic and social effects of setting regulated prices well above cost.
Read the complete submission here.
Key points of the submission included:
- CANEGROWERS considers that the proposed increases in notified retail electricity prices for 2016-17 of between 10.3-11.5% for transitional tariffs are not consistent with the requirements of the Electricity Act 1994.
- QCA has used an inappropriate definition of costs in the calculation of the “R” component of retail prices.
- QCA has substantially over-estimated the actual cost of supplying wholesale energy in the Ergon retail market.
- The proposed allowance for retailer costs in the draft determination is excessive.
CANEGROWERS is concerned that the QCA price determination announced on May 31 2016 magnifies the inefficiency and equity problems in Queensland's electricity networks - the excessive investment and poor risk management that are pushing prices higher.
The Sapere Research Group has reviewed the CANEGROWERS submission. It found that irrigators and other electricity users in Queensland are paying too much.
Its calculations show that the retail electricity costs determined by QCA for 2016-17 are in excess of efficient costs as CANEGROWERS outlined in its submission.
Read the Sapere Research Group report here.
CANEGROWERS is calling for a 33% price cut
In May 2014, CANEGROWERS started advocating for a 33% price cut to retail irrigation tariffs T62, T65 and T66. The proposed price cut is designed to short-circuit the electricity price death spiral, by lowering the price to irrigators, allowing them to use more electricity to power their irrigation systems and grow more sugarcane. The proposal is also revenue neutral to both Ergon and the Queensland Government.
Click here to download the Carbon Market Economics report
Click here to download the CANEGROWERS 2014 Electricity fact sheet (221 KB)
It explains how a price cut would stimulate demand for electricity while not impacting on revenue for Ergon and the Queensland Government.
CANEGROWERS submission on QCA's 2014 draft determination on prices
QCA Final Determination 2014-15
Carbon tax repeal
In July 2014, the Federal Government repealed the carbon tax. The repeal of the carbon tax will result in significantly lower electricity prices for all consumers. But the Queensland Competition Authority (QCA) has implemented a price floor for irrigation tariffs. This price floor is stopping the full benefit of the carbon tax repeal flowing to irrigators. CANEGROWERS has called on the Queensland Government to immediately pass on the repeal of the carbon tax to growers.
CANEGROWERS factsheet on the Carbon Tax repeal.
Regional impact of high electricity prices
The impact of high electricity prices go beyond the farm gate. At current prices, irrigators cannot afford to apply the optimum level of irrigation water to their crop. At the individual farm level, the loss of crop volume may seem to only impact on the farmer, but the combined loss of cane supply across a mill area (and across the state) has profound impacts on regional Queensland.
CANEGROWERS analysis shows the loss of sugarcane crop grown due to higher electricity prices are reducing export revenues and quickly eroding jobs in regional areas.
A smaller sugarcane crop means:
Click on the factsheets below
- Lower export returns for regional communities.
- Decline in work on-farm.
- Fewer harvester contractors in the season.
- Less jobs to operate and upgrade in the mill.
to see the impact of higher electricity prices on your local area:
CANEGROWERS’ handy tariff tool helping YOU to save on electricity!
CANEGROWERS has developed a Tariff Selection Tool
to help you understand which electricity tariff is optimal for your pump.
This is especially handy for growers who irrigate their crops, the tool can help you understand if you are on the right tariff and can also help plan farm operating budgets for the next year.
The Electricity Tariff Tool has now been updated
for the 2014-15 prices.
CANEGROWERS provides this tool FREE
for you to use.
This tool can be used in several ways:
- Help plan farm operating budgets for the next 12 months.
- Understand if you are on the wrong tariff and paying too much.
- Examine the savings of moving energy from peak into off peak times.
- Examine the savings of using a lower capacity pump.
If you discover you are on the wrong electricity tariff, you should contact Ergon immediately on 1300 135 210 and ask to speak to someone to review your tariff connection.
*Please note: This tool generates an ESTIMATE ONLY. If you are unsure about your results you should contact Ergon (listed above) for more details.
Download Electricity Tariff Tool (Excel .ods file)
- Insert your peak and off-peak use figures (in kWh) per billing quarter into the gold boxes provided.
- Nominate your pump capacity (in kWh).
- Review the 'Optimal tariff' results!