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Farmers call for electricity market overhaul

The National Farmers’ Federation is calling for the transformational change of Australia’s National Electricity Market (NEM) and a bipartisan commitment to a long-term plan that will deliver affordable, reliable and low emissions electricity.

The peak body launched its electricity policy today.

NFF President Fiona Simson said the farming sector depended on a secure, reliable and affordable power supply and currently the NEM was failing against all three measures.

“We see examples of where farm businesses are facing the prospects of crippling overnight electricity bill increases of 200 and 300 per cent due to unjustified tariff increases.

“Electricity cost increases of this magnum are impossible to absorb for any business – let alone small businesses like farmers.”

Ms Simson said some farmers were choosing to go ‘off the grid’ to avoid the soaring prices. 

“I’ve heard examples of irrigators dusting off diesel generators where a decade ago they were making huge investments to deliver 3 phase power to their pumps. 

“It is also common for dairy farmers and fruit and vegetable growers to invest in back-up facilities to guard against a blackout shutting down their cooling systems and spoiling their produce.”

“Without reform, these are not long term solutions though.  It’s expensive, inefficient and results in even higher costs for those that are fully reliant on the grid.

It’s time to end the bickering, put our heads together and come up with the foundations of a long term plan
Fiona Simson, National Farmers' Federation

In a submission to the independent review of the NEM, led by the Chief Scientist Dr Alan Finkel AO, the NFF has called on the Council of Australian Governments (COAG) to develop an enduring electricity policy framework that addresses the energy trilemma.

“We need affordable, secure and reliable, and low emissions electricity,” Ms Simson said.

“Given that about one third of our national greenhouse gas emissions are from electricity generation, we must have a long-term national plan that facilitates a smooth, affordable and reliable transition to lower emissions generation.

“Equally we need to steer away from favouring specific technologies, but rather enable technologies to compete on their merits.”

Ms Simson said the NFF’s priority was to ensure electricity remained affordable. 

“Based on current evidence, the NFF believes the lowest cost pathway to a low emissions future is some form of market-based approach. 

“As a sector that relies on long term investment, we appreciate the electricity sector needs stable, forward-thinking policy settings to provide certainty for investment.”

Ms Simson said it was unconscionable for both sides of politics to continue to use electricity policy as a political football.

“It’s time to end the bickering, put our heads together and come up with the foundations of a long term plan. 

“A do-nothing approach is not an option.  We need to reach agreement on the policy settings that can have broad-scale support from the community, industry and the Parliament.

“The powering of our farms depends on it.”

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5 Responses

    Ian, unfortunately science and the public's understanding of it has eclipsed the opinion your espouse below. It's hard to know where to start -- all major national academies of science worldwide accept the basic tenants of climate science that you reject. The science is not readily discredited -- other than a handful of fringe, inconsistent conspiracies by armchair scientists, no serious academic work presents any significant challenge to the science. The increase by 40% of the atmospheric CO2 _is_ a result of mankind's combustion of carbon that was previously sequestered underground -- your simplistic understanding of the effects of accumulation is easily understandable. Happy to explain if you are genuinely interested, but I suspect you aren't. Lastly, please don't advocate for increased CO2 to make plants happy -- at your proposed level of 2,000 PPM humans become drowsy and worse. like arsenic at tiny concentrations CO2 is essential for life, but even in very small concentrations, it is highly problematic. 'Nuff said.

    In reply to Kim's query - Firstly the 'rural area' isn't the only part that is monopoly All of the power grid is monopolistic. To be otherwise would require a second set of poles,wires, underground cables, substations all running along the streets and into private premises and if there were three players then three sets would be needed. A financial and physical near impossibility. What has happened is that the 'grid' has been separated from the energy trading aspect. The energy trading has been sold to private enterprise who are nothing more than paper shufflers who receive meter reading figures from the owners of the grid which they then calculate your bill and issue it. They are also required to include a 'supply charge'which is set by a pricing tribunal (IPART in NSW) which is paid to the owners of the 'poles and wires'. Whilst that 'supply charge' is strictly controlled, the energy charge part has an upper limit set by IPART but is allowed to be discounted by the traders (with, I might add, plenty of scope to do so). Those who are getting a 23% discount is one such example. The traders are still making a profit on those accounts. So it is obvious that a real killing is made on accounts paying the full amount. It is something of a pseudo competitive market. Some companies do deals with specific organisations to gain an advantage over the competition whilst still making a profit. The halcyon days of ''at cost' electricity are, sadly, over.

    Unfortunately for the farmers it represents NFF policy now means it supports continually escalating energy costs and unreliability for its members. The reason for this is the failure to check the facts surrounding both sides of this 'climate change' issue resulting in the naive whole-hearted acceptance of the readily discredited IPCC hypothesis. The facts are that carbon dioxide is a minor greenhouse gas whose atmospheric concentration naturally varies some hundreds of years after a change in average global temperature as determined by 'Henry's Law'. Using the IPCC's own figures in its AR5 Report, only 4.3% of total carbon dioxide emissions arise from mankind's activities with 95.7 from natural causes. Even if we cut our emissions to zero, it would make a barely perceptible difference to the rate of carbon dioxide increase into the atmosphere. And why should we worry about that? The fact is carbon dioxide is an essential ingredient allowing the photosynthesis mechanism to operate enabling all plant life to exist and grow. The optimum atmospheric carbon dioxide level to maximise plant growth is ~ 2,000ppmv, some 5 times the present level. It is in our direct interest to see this relatively low level rise as it has a remarkable 'fertiliser' effect on plants, water use efficiency, disease resistance, etc., and therefore yield. Despite the claims being made, NO ONE has yet come up with even one piece of empirical evidence supporting the hypothesis that man's (minor) emissions of carbon dioxide have now overridden the powerful multiple natural drivers of climate, to become the principle causative element of the current warming period. This is such a fundamental issue that with the best intentions in the world if we 'get it wrong' it will not only be futile, but extremely costly for everyone. The NFF should lobby for a major, comprehensive Inquiry to help resolve the matter so policy can proceed on an evidence-based foundation.

    Sadly I think we have missed the boat. Power generation,transmission and distribution has, since the 1950's, been the domain of State Governments ( generation and transmission.) and Electricity County Councils (distribution). In recent years successive Govt's of both sides have all been afflicted with the myopic disease of selling these assets for short term financial gain at the expense of long term financial returns. Where to from here for energy? In the hands of private companies the only way is up for prices unless an all powerful regulatory authority is appointed to apply the brakes. From the NFF point of view a number of issues need to be argued. Firstly, CO2 is not a pollutant. There is plenty of scope for the atmospheric concentration to rise from 400 parts per million to 1000 ppm. Allowing coal fired generation to continue is desirable not detrimental. Secondly man is not the main contributor of CO2 in the atmosphere. Look at the world distribution of population. The vast majority are in the Northern Hemisphere yet CO2 measured in both hemispheres is around about the same value and rising at about the same rate. That rising effect is part of a natural cycle and can be expected to peak before falling. As there is very slow mixing of the two hemispherical atmospheres, if man is the main contributor then the Northern Hemisphere should have much greater concentrations on a continuing basis than the South but such is not the case. Thirdly, in order to keep the price of energy in check we should not be subsidising wind and solar. If they can provide cheaper energy then they should be able to compete without subsidy. Fourthly If we don't want to burn coal then we should be switching to Nuclear powered generation or revisiting Geothermal generation as reliable, available 24/7 generation. Finally we should be arguing that the current status quo remain until such time as scientific research, discovery and development of energy storage on a large commercial scale is found developed and produced at an affordable and competitive price.

    How does a market response work in a monopoly situation such as most of the rural electricity grid?

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