7 Dec 2016
Across Queensland there are over 42,000 regional customers that will be transitioning to cost-reflective electricity tariffs (also referred to as demand tariffs) by 1 July 2020. The majority of these customers are agricultural businesses that have relied upon ‘transition’ or ‘obsolete’ tariffs including: small general business (Tariff 21); large general business (Tariff 20 Large and 22 Small and Large); and farming and irrigation (Tariffs 62, 65, 66).
With these incoming changes there are many challenges that industry and government need to resolve to ensure these new cost-reflective modelled tariffs are understood and businesses have sufficient data on their electricity consumption patterns to make an informed tariff choice/selection.
Industry remains concerned that there is still a prevailing disconnect with the government messaging in relation to the impending electricity price changes coupled with changes to the current tariffs. A large number of farm businesses remain unaware of the changing tariffs and how this will impact their business post 1 July 2020. Many customers currently on transitional and obsolete tariffs may face price increases of over 50 per cent when they move to cost-reflective tariffs mid-2020 and this may challenge the viability of some of these customers.
As part of its response to the Queensland Productivity Commission’s (QPC) Electricity Pricing Inquiry Final Report, the Queensland Government recently announced a $10 million Regional Business Support Package with emphasis on regional and agricultural businesses. The package was designed specifically to address the tariff transition issue through a series of trials and education programs. While the package will not lower electricity prices, it is positive that the government is at least acknowledging the impact reoccurring electricity prices increases has and continues to have on farming businesses.
The reality remains that unsustainable electricity costs are eroding the viability and productivity of many agricultural businesses in Queensland. Cost increases for irrigated agriculture have been in excess of 100 per cent for most farmers and as high as 300 per cent for some farmers since 2007. Government needs to get serious about directly addressing spiralling electricity prices as well as supporting proactive programs that provide the tools, including appropriate electricity meters, for electricity users to monitor and understand their specific electricity use.
One proactive way government and industry are working together to ensure farm businesses are prepared for price increases and the impending tariff transition is through the Queensland Farmers’ Federation (QFF) and Ergon Energy’s Energy Savers Program. Funded by the Queensland Government, the Energy Savers program is designed to assist farmers reduce energy costs by supporting the adoption of practices and technologies to reduce on-farm energy use.
Under the program, 130 irrigation and processing system audits of farm businesses from different industries are being conducted to identify suitable energy efficiency and renewable energy opportunities. Case studies of the findings from these audits are available online (www.qff.org.au/energysavers). Field days and workshops for farmers are also being held to highlight the opportunities identified by these audits and to introduce relevant technologies, service providers and financing options that help remove barriers around accessing energy productivity.
QFF and its industry members will continue to work constructively with government to ensure our sector is ready for the tariff transition in 2020. It is, however, up to government at both state and federal levels to address the greater underlying issue of electricity affordability.
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