National Farmers' Federation

NFF welcomes independent spotlight on electricity pricing

The National Farmers’ Federation (NFF) has welcomed the decision of Prime Minister Malcolm Turnbull and Treasurer Scott Morrison to direct the Australian Competition and Consumer Commission (ACCC) to review retail electricity prices.
NFF President Fiona Simson said farmers across the nation had endured skyrocketing electricity tariffs for many years now and the frightening upward trajectory had to stop.
“As a case-in-point, sugarcane growers in Queensland have faced hikes of 120% in recent years and in South Australia farmers have battled rises of up 300%.”
“Farm businesses are small businesses and they just cannot absorb these types of extra cost impositions,” Ms Simson said.
Ms Simson said it was a reality that most rural and regional households and businesses had no or little choice of electricity provider and that this meant, more often than not, retailers enjoyed a monopoly situation.
“Monopolies rarely deliver positive outcomes for consumers.”
Ms Simson said tariff rises for farmers had largely been driven by the over investment or “gold plating” of the assets of electricity network and retail businesses.
“Government regulated network costs and other charges account for about 70% of a typical bill for a farmer – while the actual cost of electricity makes up less than a quarter of the bill.
“Electricity companies – and the Governments that own some of them – have been reaping the profits – as tariffs provide a return on this over-investment. The Queensland Government alone pockets about $1.5 billion in electricity company dividends annually.
“Worryingly the proposed current change to tariff structure by the Queensland State Government would see an overnight increase in electricity bills of between 200% and 300% in some regions.”
Ms Simson said customers should not be paying the price for wasteful, over investment in the past – nor should they be lining the pockets of asset owners through inflated profit margins.
“This inquiry is an important opportunity to shine a truly independent light – that takes a consumers perspective – on the way power prices are established.”
Ms Simson concluded that this inquiry does not absolve Governments of the need to comprehensively address the other drivers that affect the affordability, reliability and sustainability of electricity supply – including the need for reform to the National Electricity Market and the long-term, bipartisan policy settings that are required to support future investment in power generation.

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