Energy Minister points finger to LNG for wholesale electricity price hikes

Mr Bailey was in Barcaldine speaking with the company that is instigating Queensland’s first large-scale renewable energy project, which began construction this week.

In response to a question on why the prices irrigators in Queensland pay are going up 12 per cent when there’s a surplus on generating capacity and irrigators’ demands for power wasn’t increasing, Mr Bailey said that Queensland’s electricity market was different to southern states.

“Prices are plateauing in the south but the 15 per cent increase in Queensland is driven by the LNG plants at Gladstone.

“They chew up a lot of electricity, and it’s driving up the wholesale price.

“A fifth LNG train has just come on and there’s one more to go, so this will continue. We’ll have to see where it goes,” he said.

Canegrowers CEO Dan Galligan said no irrigation schemes have been built in Queensland in the past 20 years and irrigation pumps have become more efficient, meaning irrigators are not placing an additional load on the network.

“Irrigators have worn price increases of 120 per cent since July 2007, and Canegrowers has been campaigning hard for an overhaul of electricity pricing.

“Is the Minister seriously suggesting that because the LNG industry in Queensland is a big user of electricity, it’s becoming scarce for everyone else and we have to pay more?”

Irrigators face another 12.3pc rise on 1 July.

“These increases are overwhelming for farm businesses and many are seeing their production suffer as they cut back on pumping costs. These are family farms,” Mr Galligan said.

“We are fed up with government and the electricity industry’s lack of action on the underlying problems within the flawed and unfair pricing system. Electricity pricing is neither cost-reflective nor is it efficient.

“Irrigators do not need to use electricity at peak demand times yet the pricing framework is not geared around encouraging use at off-peak times.”

Canegrowers argues that in a truly cost-reflective pricing environment, supplying electricity to heavy energy users such as LNG developments should have nothing to do with the cost of supplying power for pumps to grow food and fibre.

Mr Bailey added that a federal delay in setting renewable energy targets had reduced Queensland’s ability to expand supply and therefore see competition on prices.

He said the $69m 80ha solar farm at Barcaldine came with 110 jobs, which should have been in the district 12 months ago to help cope with the economic downturn brought about by drought.