Farmers warn of more power pain

Farmers warn of more power pain
February 15 2017

Sugarcane growers are in Brisbane today sounding a warning to all electricity users that staying cool in summer, running a business and watering food crops is about to get more expensive.

“The Australian Energy Regulator is on the verge of making a final determination on a new network tariff structure proposed by Ergon which will lead to higher retail prices,” said Dan Galligan, CEO of the peak cane farming organisation CANEGROWERS.

“But we can show that Ergon’s latest proposal is based on ‘evidence’ that is contradicted by its own publicly available data.”

A report, commissioned by CANEGROWERS and completed by the Sapere Research Group, has been launched in Brisbane today. Click on the image above to view the report which examines two network tariff proposals put forward by Ergon:

Summer peak (energy and demand) tariffs apply hefty penalty rates to businesses using a lot of power during weekday business hours and for residential customers using a lot of power during afternoons and early evening, every day of the week.  This benefits off-peak users, but is a cost to businesses and families who cannot easily change the times they use electricity. 

Under inclining block tariffs, rates go up in three steps as usage increases. These do not reflect network supply costs but instead unfairly penalise above average users of electricity and reward lower than average users. Under this scenario larger families, more energy intensive businesses, including irrigators, and those without solar panels would pay more.   

“Ergon is apparently trying to avert a hefty network expansion bill with these penalising tariffs which aim to reduce electricity usage.

“But expansion isn’t needed because Ergon’s own data shows there is a lot of spare capacity in the network.

“Ergon’s 2016 Distribution Annual Planning Report shows that 98% of the low voltage network has enough spare capacity to meet all forecast peak demand growth for the foreseeable future,” Mr Galligan said.

The CANEGROWERS-Sapere report found the network congestion data used by Ergon in its tariff proposal overstates congestion by a factor of approximately 375. The scale of the pricing distortion at $1.8 billion over five years.

“This situation facing regional Queenslanders getting their power from Ergon is not a one-off,” Mr Galligan said. “The same flawed approaches have also been applied to Energex and in other parts of the National Electricity Market.  

“In the view of Sapere and CANEGROWERS, Ergon’s network tariff statement breaks national electricity rules and the AER should reject it.

“CANEGROWERS calls Ergon to re-submit a proposal that contains fair pricing which does not put an unnecessary cost burden on Queensland energy users.”

The full Sapere report commissioned by CANEGROWERS, Errors in Australian Energy Regulator’s Draft Decision on Ergon Energy’s 2016 Tariff Structure Statement, is available for download.