ELECTRICITY network charges are soaring, forcing irrigators to choose between two evils – switching off power-hungry pumps or sticking with water efficient, but costly, systems.
Network charges are soon to be locked in for the next five years and country NSW network provider Essential Energy’s pricing proposal bodes ill for farmers.
According to NSW Irrigators, government-owned energy companies such as Essential Energy poured too much cash into building up their network, and now the maintenance bill is flowing to customers.
“Network charges have risen steeply in the past five years due to significant capital investment by the networks to meet a forecast demand which never materialised,” said NSW Irrigators economic policy analyst Stefanie Schulte.
Compounding the problem are government water-saving schemes, which encourage irrigators to invest in upgrades in new equipment, such as drip irrigation systems.
NSW has allocated $220 million to its on-farm water savings, which it said could have saved up to 40 gigalitres to date, and the federal government is investing more than $1 billion in similar schemes across the entire Murray Darling Basin.
However, while the new equipment saves water, it can often use more power than older systems such as furrow channels.
Drip irrigation manager for Western cropping outfit Tandou, David McClure said high power costs put irrigators in a bind.
“By trying to save electricity you will use more water and by trying to save water you will use more electricity. Essentially you are weighing one resource against another,” he said.
“We have struggled with that economic decision and we just could not afford to keep subsidising some water-saving measures.”
NSW Irrigators surveyed its members last year and found network charges typically comprised more than 50 per cent of an irrigator’s power bill – for Tandou, that cost had exceeded 90pc before it revised its power use.
“Nobody was talking about electricity prices when the (Millennium) Drought hit, but in 2010 when our we had our first crop after the drought, everybody was talking about the cost of energy inputs,” Mr McClure said.
“Because we had been out of the game the impact really hit home for us.”
Murray Private Irrigators’ chairman Murray Shaw, “Uri Park”, Darlington Point, still runs off diesel power.
He has watched network charges skyrocket from the sidelines, and said he was better off than his neighbours who switched to electricity systems.
“It costs me $40 a megalitre to pump with diesel,” he said.
His electricity-using neighbour installed new pumps in the early 2000s, which cost about $90/ML to operate, “but he has just pulled them (his electric pumps) off and spent roughly $100,000 to install diesel,” Mr Shaw said.
Essential Engery’s proposal, submitted to the Australian Energy Regulator, revealed the company historically over-estimated demand by more than 18pc.
It has also requested an additional $1b in revenue from government, compared with the previous five-year period, but said its request is below inflation and spending would be focused on network maintenance and upkeep.
“Only a relatively small amount of our revenue is allocated to new infrastructure,” said Essential Energy’s chief operating officer Gary Humphreys.
Network demand has stabilised and “Essential does not expect to see peak demand growth in the next few years”.
Mr Humphreys said there were still pockets of the network that need to be upgraded to provide more capacity, pointing to areas with growing housing
estates such as the north and south coasts.
Cotton Australia said the network was “gold plated” and called for an end to “rampant price increases”.
“Investing more capital to build bigger networks while demand declines is simply not the solution,” said Cotton Australia policy manager, Michael Murray.
Submissions on Essential Energy’s pricing proposal are due by August 8, and a draft determination is expected by the end of the year.
Click here to make a submission.
