In its submission to the Independent Review into the Future Security of the National Electricity Market, chaired by Chief Scientist Alan Finkel, CANEGROWERS outlined a five-point plan that CEO Dan Galligan said was a fair and competitive pricing system based on good market discipline.
“The current system contains incentives for wasteful over-investment in network capacity and under-investment in base load generation capacity,” Galligan said.
“It’s a situation that has driven Australian electricity prices up to be among the most expensive in the OECD.”
It comes after the National Farmers Federation called for an energy overhaul in Australia, in its submission to the Finkel review early this month.
NFF president Fiona Simson said Australia’s National Electricity Market (NEM) was failing against all key measures of secure, reliable and affordable power supply.
“We see examples where farm businesses are facing the prospects of crippling overnight electricity bill increases of 200 and 300 per cent due to unjustified tariff increases,” Simson said.
Galligan said unnecessarily high electricity prices were a hidden tax on businesses.
“While governments appear to be struggling for a solution, the way forward is actually simple if governments, energy regulators and energy companies are genuinely committed to an electricity generating and distribution system that efficiently, sustainably and affordably delivers electricity to enable a growing economy,” Galligan said.
“Prices and tariffs should provide performance incentives, encourage reductions in cost across the supply chain and enable electricity users to remain internationally competitive, electricity businesses must bear the consequences of their investment decisions.”
The CANEGROWERS have called for the Council of Australian Governments’ Energy Council to commission an independent assessment of the economy-wide costs and benefits of the electricity prices, which Galligan believes is currently at unsustainably high levels.
“Our members, the sugarcane growers of Queensland, have faced electricity price rises of 120% in the past seven years and we are just one industry of many feeling this pain,” Galligan said.
“On the other side of the ledger, the Queensland Government, taking advantage of unrealistically high asset valuations, has saddled Energy Queensland with debt shifted from its own balance sheet.”
CANEGROWERS’ five-point plan:
- COAG – Reinstate pre-2006 rules that require the optimisation of the electricity Regulated Asset Base and require network owners to face the risks of their decisions.
- COAG – Redesign network tariffs to ensure that irrigators and other businesses in non-congested parts of the network are not required to meet congestion costs in other parts of the network.
- COAG – Review the governance structures in Australia’s electricity regulatory oversight framework to ensure it is working efficiently and effectively for the long-term benefit of the Australian economy.
- Queensland Government – Reinstate local distribution grids to identify opportunities to increase efficiency, reduce costs and lower prices by ensuring the level of service provided matches local needs and circumstances.
- Ergon – Re‐submit its most recent tariff proposal so that it contains fair pricing which does not put an unnecessary cost burden on Queensland energy users.
