Farmers wary of Finkel report failures

The independent export panel’s review into the future security of the National Electricity Market (NEM) has been spearheaded by Australia’s Chief Scientist Dr Alan Finkel and received over 360 submissions during the consultation period.

The report came out of an agreement in October last year by COAG Energy Ministers to review the NEM’s current status in order to provide updated advice to governments on a coordinated, national reform blueprint.

A preliminary report was released in December last year.

The National Farmers’ Federation’s (NFF) review submission said the NEM was “not working for Australian farmers and needs serious reform”.

NFF said the entire Australian community relied on secure, affordable access to electricity and other forms of energy, and the Australian agriculture sector was “no different”.

“The current regulatory regime is not serving the interests of users and this is particularly the case for Australian farmers,” it said while highlighting a case study that showed an analysis of demand tariffs on irrigators in St George increased electricity bills between 200 per cent and 300pc.

“The regulatory regime needs to be updated to maintain ongoing relevance of the NEM to consumers and to meet future challenges.

“A coordinated national strategy for emissions reduction and electricity market reform is necessary to provide certainty and to ensure access to affordable and reliable sources of electricity.

“To ensure that Australian agriculture and downstream value adding sectors remain internationally competitive, it is essential that the policy levers of government work cohesively to these objectives to ensure the most efficient plan for change is adopted.”

Ahead of the final Finkel report being submitted to COAG today, the NFF and irrigators again highlighted the need to attack reforms that will address the core issues or energy affordability and reliability.

NFF President Fiona Simson said for farmers, high power prices were more than just a drain on the bottom line as they also competed with farmers from other countries that have lower costs of production, are highly subsidised, or both.

Ms Simson said minimising the cost of inputs was “critical for farmers to compete in our most valued markets – both overseas and at home”.

“The farmers I talk to know that a transition away from the cheap, coal-based power generation is inevitable as assets age and new technologies become more and more affordable,” she said.

“We know the transition to clean energy generation is not free, but the threat of climate change makes the sacrifice worthwhile.

“Minimising the transition cost is only possible if we have stable and coherent policy settings that provide the right signals.”

Ms Simson said the current NEM rules favoured electricity businesses at the expense of the consumer.

But she said the Finkel report was an opportunity to reset the conversation about the policies required to achieve a secure and reliable, affordable and sustainable electricity supply into the future.

“It’s time for the Commonwealth to put all options on the table - including market-based approaches - and to support an evidence based discussion on how we get the national policy settings right,” she said.

“It’s time for the states to agree to genuine regulatory reform to the NEM.

“The states need to show that they care more about households and the competitiveness of businesses than they do about their prized cash-cows – the state-owned electricity generation, network and retail businesses.

“A business-as-usual approach is not an option.”

The National Irrigators’ Council (NIC) said the Finkel report must set the stage for a return to certainty and lower electricity prices - otherwise Australia risked pricing itself out of international markets.

NIC CEO Steve Whan said the government and the Australian people saw agriculture, and particularly irrigated agriculture, as supplying fresh food for Asia, driving export income and jobs so Australians can continue to enjoy our high living standards.

Mr Whan said water and electricity were inputs that enabled Australia to supply that fresh food and natural fibre.

But he said it was “quite clear” that if electricity prices continued at current levels, there would be a growing gap between expectations and reality.

“Electricity prices can be a massive input cost for producers of vegetables, fruit, nuts, dairy products, grapes, sugar cane and cotton,” he said.

“It’s not going to be good enough for Finkel report to just be the start of a process that in the medium to long term slows increases or just stabilises prices and it won’t be good enough if the outcome is one that allows networks and their owners to lock in exorbitant returns at the expense of consumers.

“Australia’s power prices are a serious threat to the production of reasonably priced agricultural product.

“Australia should have a competitive advantage with energy and the Finkel report needs to be the start of power prices coming down - not just another chapter in an argument where all, bar the network owners, are the losers.”

Irrigators annoyed at costs

Bundaberg Regional Irrigators Group representative and Chair of NIC’s Energy Committee Dale Holliss said 2009 prices had increased by over 130pc – but CPI in that time had only increased by 21pc.

Mr Holliss said water and electricity are inputs that enable Australia to supply fresh food and natural fibre.

But he said irrigators’ electricity prices are a serious threat to the production of reasonably priced agricultural product.

“A number of our members who irrigate sugar cane are seriously considering diesel as an alternative or going back to dry land farming and abandoning irrigation altogether,” he said.

“We would like the Finkel report to identify a method that would return the networks back to enabling infrastructure.

“At present they are cash cows for whoever owns them.

“In Queensland successive state governments have used ERGON, ENERGEX and Powerlink to suck the wealth and capital from regional Queensland - this is then sent down the power line to Brisbane and is evaporated between Ann and George Streets.”

Political commentary has also been heightened this week with the report’s imminent release sparking debate over the merits of a carbon trading scheme.

Opposition leader Bill Shorten said indecision and confusion about policies was discouraging long term investment in energy markets that, across the eastern coast of Australia, are in “disarray”.

“Wholesale electricity prices have doubled, we've got a gas crisis in terms of availability of local gas,” he said.

“We want to see a decrease in pollution rather than an increase in pollution and we certainly want to make sure that we provide certainty for investment which helps keep downward pressure on electricity prices.

“So yesterday I wrote to Mr Turnbull, I extended an olive branch because Australians want more from their political leaders than just the ongoing fighting and division over climate change.

“We've said to Mr Turnbull that depending on what's in the Finkel report, the Chief Scientist’s report - that we are willing to work with the government to find the best way forward.

“Now all of the experts say that an Emission Intensity Scheme focused on power generation is the best way forward to keep a downward pressure on prices, to help increase jobs, to improve our energy market and of course, tackle pollution.

“If the Finkel Report comes up with a scheme and it's not called an Emission Intensity Scheme, even though that's probably the best option - if it's called a Low Emissions Target (LET), depending on what is in the Low Emissions Target - we are not going to let the name stop a deal occurring.

“We are prepared to work with Mr Turnbull to put a price signal on emissions, not to try and keep pretending we can keep reinvesting in new coal-fired power stations.”

Agriculture and Water Resources Minister and Nationals leader Barnaby Joyce said a coal-fired power station was “vastly more likely” built to provide base load power, under something like the LET.