by clicking the arrows at the side of the page, or by using the toolbar.
by clicking anywhere on the page.
by dragging the page around when zoomed in.
by clicking anywhere on the page when zoomed in.
web sites or send emails by clicking on hyperlinks.
Email this page to a friend
Search this issue
Index - jump to page or section
Archive - view past issues
TAS Country : November 11th 2010
Friday, November 12, 2010 Tasmanian Country 15 Power price hikes hit farmers, too PAYING DEARLY: Many farmers opt to use electrically operated pumps for irrigation. OVER the FENCE John Rich THE media has given a fair amount of attention to the proposed increases in electricity tariffs, with particular reference to home users and the likely impact on that sector. I have yet to see any reference to the likely impact of price rises for electricity used by the farming sector. Most cropping situations in Tasmania require the use of irrigation and many farmers opt to use electrically operated pumps for this purpose. The Office of the Tasmanian Economic Regulator, in its final report into electricity prices for residential and small businesses for 2010, announced in October that customers may expect an average price increase of 8.8 per cent on December 1, 8.5 per cent on July 1, 2011, and 8.7 per cent on July 1, 2012. Added together, this is an overall increase of 26 per cent in just 18 months. These figures assume an inflation rate of 2.5 per cent for 2011 and 2012. I was intrigued to read a comment attributed to Michael Aird, the Tasmanian Treasurer, apparently justifying these increases with the statement: ''To have a safe, secure electricity supply system, we need a high level of investment and these prices support that investment.'' On the other side, Will Hodgman states ''these prices will mean Tasmanians would pay the highest power prices in the country''. I mentioned the power cost increases to a colleague and was informed that in his opinion this is a direct result of the electricity supply organisation and past governments being more concerned about delivering substantial profits into consolidated revenue from electricity rather than managing and properly maintaining the infrastructure. I think there could be some truth in that thought, and all of us will now be expected to pay dearly for what has occurred, or rather, for what has not occurred. These forecast cost increases are yet another severe blow to an already financially overstretched farm sector. My focus is on Irrigation Tariffs 73 and 74. Tariff 73 is what is called ''low rate'' and is the night rate for pumping generally between 8pm and 7am. Tariff 74 is the ''high rate'' applied to pumping generally between 7am and 8pm. The first thing to note is that all farmers would want to use the low rate when pumping. The second note is that, while this is a good and practical aim, in reality it is not always possible to fully utilise this rate. There are many times when pumping has to extend into the high rate period to ''finish off'', or when weather conditions simply mean that pumps have to operate for extended periods. Each pump site incurs what Aurora calls fixed charges. This is a daily charge and applies regardless of whether or not the pump is used. I went back to see what the fixed charge was in December 2005. It was called services charge then and was $1.66133 per day. The present fixed charge is $2.61346 per day. These figures show that the fixed charge for each irrigation pumping site has increased by 57.33 per cent in five years. The forecast increase by July 2012 will be at least 83 per cent in just six years. The fixed charge for home supply is currently Tariff 31 light and power (73.882 cents per day) and Tariff 41 hot water (14.305 cents per day), 88.187 cents per day. A farmer will currently have to pay a fixed charge of $954 each year for each pump site. An efficient cropping farmer advised me he had no less than nine pump sites. This means he has to pay Aurora $8586 this year, just for the fixed charges. Aurora states that fixed charges cover meter reading, billing costs, part of the meter capital cost and some of maintaining and connecting to the electricity distribution system. How confusing is this, when farmers have to pay all of the infrastructure costs to deliver power from the first pole on the property to the pump site, including the capital cost of meter installation and maintenance? Exactly how much does it cost to read a meter and how much are the billing costs in today's electronic world? Most, if not all, farm pump meters do not have to be read during the off-season, generally March through to September. Is it possible to save money for farmers with Aurora only reading farm pump meters at the end of March and again at the end of December? This would also avoid the issues of those times when the meters cannot be accessed for reading because of unfavourable, generally wet, conditions during the off-season. At the end of December 2005 the Tariff 73 energy charge for kWh used was 6.674 cents, Tariff 74 was 15.188 cents. The current Tariff 73 is 10.909 cents and Tariff 74 is 24.824 cents. Both rates have increased by 63 per cent in the past five years. Taking into account the forecast increases, the farmers will be paying almost 90 per cent more for power by July 2012 than they were at the end of 2005. All of this makes me continue to wonder about the Premier's desire to make Tasmania the food bowl for the nation. The delivery of irrigation infrastructure to Tasmanian farmers is a fine ideal. It now seems that the cost of irrigation water plus the increasing cost of electricity to use that water will make it even more difficult for farmers to be competitive than it is at the present time. I remember meeting with electricity company people quite some years ago and being informed that Basslink would be a major benefit to Tasmanian farmers because it would alter the supply situation and prices would reduce. Funny thing, prices never came down. I now wonder why I believed what I was told. I would like to see the farmers meet Aurora to seriously look at what can be done to ease the financial burden of the cost of irrigation. I expect there are some environmental aspects in favour of using electricity against alternative pumping systems. Perhaps this should count for support from Government. Opinion
November 4th 2010
November 18th 2010