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Time to reset conversation about electricity

The power needs of many farms are not insignificant. There is only so long a business can withstand year-on-year price hikes before its viability starts to be threatened.

As I traverse the nation I hear story after story of the astronomical power price rises farmers are experiencing.  The power needs of many farms are not insignificant.  Our sector uses electricity to run pumps for irrigation water, to power dairy milking machines, shearing sheds and fruit and vegetable packing facilities.  There is only so long a business can withstand year-on-year price hikes before its viability starts to be threatened.

For farmers, high power prices are more than just a drain on the bottom line.  We compete with farmers from other countries that have lower costs of production, are highly subsidised or both. Minimising the cost of our inputs is critical for farmers to compete in our most valued markets – both overseas and at home.

Farmers are also focussed on the future.  They are at the frontline of the impacts of climate change – and most accept that as a nation we must contribute our fair share of global effort to reduce our greenhouse gas emissions.  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.  

Likewise, as the peak representative body for Australian farmers, the National Farmers' Federation sees integrating renewables into the electricity supply as critical to meeting Australia’s emissions targets.  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.  Investors in large-scale generation are looking for certainty to spend the big money needed to underpin generation capacity.  Our distribution network needs the right signals to invest in the modern networks needed to cope with increasingly decentralised generation and changing patterns of demand.  And consumers need the right signals to know how and when to use power and to make investments in energy efficiency and self-sufficiency.

This is an opportunity to reset the conversation about the policies required to achieve a secure and reliable, affordable and sustainable electricity supply into the future.
Fiona Simson, President, National Farmers' Federation

Solving the security, affordability and low-emissions trilemma is only part of fixing the problems with the National Electricity Market (NEM).  The current rules favour electricity businesses at the expense of the consumer.  In recent weeks, we have seen the Federal Court throw out the Australian Energy Regulator’s attempt to curb the inefficient largess of electricity distribution networks in NSW.  In Queensland, we’ve seen the state government intervene in the independent price setting process for retail electricity to provide tariff relief for consumers.  And while short term relief from this intervention is welcome – is it really the best policy approach we can come up with?

The need for a long-term, consistent, bipartisan policy signal for all players in the electricity sector is a concept that is beyond debate for what seems like everyone except our politicians.  Most of the evidence thus far points to a technology-neutral, market-based mechanism as being the most affordable pathway to solving our electricity woes.

On Friday Chief Scientist Professor Allan Finkel will present his final report on the future of the National Electricity Market (NEM) to First Ministers at COAG.  This is 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. 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.

Fiona Simson is a farmer from the Liverpool Plains of New South Wales and President of the National Farmers’ Federation.

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