Aussie cotton sector to fight electricity price hike

Cotton Australia’s Policy Manager for Queensland & Water, Michael Murray, says the Queensland Competition Authority’s (QCA) draft determination on electricity prices for 2013-14 proposes an increase of 17.5% for popular farm and irrigation tariffs.

The push follows a 10% rise in electricity prices for farmers in 2012-13.

“Since 2000, electricity prices based on popular Tariffs 65 and 66 have risen by 250%, or an average of 19% per annum,” Mr Murray says. “These rises are completely unjustifiable given annual inflation has been around 3%.”

“There is something fundamentally wrong with a system that, year after year, awards price increases far in excess of CPI.”

Mr Murray says the latest proposed increase in electricity costs was not matched by rising commodity prices. The average price per bale for cotton since 1990 is $461, and today a bale of cotton fetches below $450 on the export market.

The QCA’s recommendation would allow irrigators to continue to access existing tariff structures for seven years, up from the one-year transition period allowed last year.

Mr Murray says the extended transition period was inadequate, but it did at least protect larger users from what would have be the devastating impact on being forced onto demand charges immediately.

“Larger users were facing the potential of immediate electricity price increases in the order of 250%, which would have made electricity use completely non-viable for irrigators,” Mr Murray says.

“But what we have now is death by a thousand cuts - all irrigators will face these 17.5% increases, and with a history of massive year-on-year increases it is hard see how any irrigation users will be able to afford to use electricity in the near to medium term,” he says.

“With electricity pricing the Queensland Government is forcing irrigators off-the grid, whether now or in seven years’ time, and the end result will be electricity suppliers with stranded assets.”

“For many reasons, the Queensland Competition Authority’s proposal just doesn’t stack up. We call on the Queensland Government to put a stop to these rapidly increasing electricity tariffs that will impact cotton growers, many of whom are struggling in the wake of severe flood damage.”

“We also urge cotton growers throughout the state to contact their local members, the Minister and Premier and demand action to put an end to these price hikes.”

Cotton Australia