The Queensland Competition Authority (QCA) has today stunned the state’s cotton industry and irrigating farmers by delivering a determination that raises electricity pricing even higher than it flagged earlier this year.
In March, the QCA’s draft determination on electricity pricing was expected to deliver cost increases of 10-12 per cent.
But today’s announcement means that on average, prices for businesses, farmers and irrigators will increase between 11.2 and 15.8 per cent.
Cotton Australia General Manager, Michael Murray has described the determination as “devastating” for cotton growers and other electricity users.
“To put this into perspective, the QCA’s determination today means a user with an annual spend in 2015-16 of $50,609 – not uncommon for an irrigating farmer - will now have to spend $56,639 for using exactly the same amount of power in 2016-17,” he said.
“That is a massive increase for what is really a moderately sized farming enterprise.”
Mr Murray said that since 2007-08, electricity prices for irrigators had increased by more than 100pc, yet cumulative CPI over this period has been approximately 25pc.
“Farmers had been hoping for a period of price stability and, in fact, we had called on the Queensland Government to directly intervene in March this year when the QCA handed down its ridiculous draft determination,” he said.
“But it doesn’t seem to matter which government is in power, they all appear to be incapable of arresting double-digit price increases.”
“Two years ago we had been told we were past the worst of it, and yet we have had just one year of respite and now the price increases are back, worse than ever.”
“It is absolutely clear that the mechanism for electricity pricing in Queensland, and indeed across Australia, is broken and completely out of touch with what is happening across the rest of the economy.
“All levels of government and all political parties must bite the bullet and lead the reform of electricity pricing, otherwise grid-based electricity will become completely unaffordable, people will abandon it in droves, and we will be left with a massive white elephant as testament to a failure to properly transition to a renewable energy future.”
“For now, Cotton Australia has no choice but to actively encourage our growers to explore ways to either leave the grid entirely or significantly reduce their reliance on it.”
In a media statement, Minister for Energy Mark Bailey said the QCA final determination means that in 2016-17, a typical residential bill will rise by 2.8pc with typical small business customers seeing a rise of 11.2pc. However, the impact on individual customers will vary case by case depending on their consumption.
Mr Bailey said that this represented a change from the draft determination.
“While this change was unexpected, we respect the independent price setting process of the QCA,” he said.
“Part of the increase relates to increased demand for electricity in Queensland, which drive higher wholesale prices.
“However, the report revealed restrained network costs had held down the increase in electricity prices.
“This only happened because the Palaszczuk Government intervened last year directing Energex and Ergon to not appeal the Australian Energy Regulator’s decision to curb network costs.
“That direction would not have been possible if our power assets had been sold off under the LNP.
“Also, for the first time since the QCA started determining electricity prices 9 years ago, the fixed charge will reduce.
“This is good news for customers with low consumption, with almost one-third of regional retail customers receiving lower annual bills in 2016–17 compared to 2015–16.”
Mr Bailey said the government is proactively working with the business and agricultural sectors to help identify ways to manage electricity price impacts.
“This includes working with Ergon to improve information and accessibility of advice to help ensure these customers are on a tariff that best suits their needs - minimising their costs to the greatest extent possible,” he said.
“We are committed to ensuring that regional customers pay a similar price to those in south east Queensland.
“This year we will spend almost $500 million subsidising the cost of electricity in regional Queensland. That investment supports 700,000 regional Queensland customers.”
