NSW Farmers is calling for $60 million to be invested to reduce the cost of electricity for farmers to lift on-farm productivity and profitability, innovation and efficiency on farms across the state.
The cost of electricity has nearly tripled in the past decade, particularly for business and commercial users, placing significant cost pressures on farmers. Regional and rural users already pay 25 per cent more than users in urban areas, creating significant economic disadvantage.
The electricity network operated by Essential Energy is the single largest cost component of electricity for regional users. Opaque and uncompetitive retail markets conspire with network costs to ensure that farmers do not get the best deals available in the market.
To address this, NSW Farmers is calling for:
- a reduction in network costs by writing down Essential Energy’s regulatory asset base by an initial $250 million over five years. The Essential Energy electricity network has $3.3 billion of unutilised assets, which generate regulatory revenues that consumers must pay for. This adds $250 million per annum in costs for electricity for regional users. NSW Farmers is calling for a rolling program of asset write downs, at $50 million per annum, reviewed every five years. This will provide significant price reductions for regional electricity users.
- establishment of a $60m Rural and Regional Energy Investment Fund to promote collaboration between regional end-users and Essential Energy to ensure a smooth transition to a more decentralised regional electricity network through innovation and cost mitigation. The regional electricity system is in transition. We must ensure that this transition provides the most cost-effective provision of electricity within New South Wales. For regional and rural users this means promoting a greater reliance on decentralised electricity systems. The Fund would be used for co-investment in decentralised energy resources that help reduce network costs, or energy efficiency programs that mitigate the need to upgrade capacity in local distribution assets.
- implementation, in full, of recommendations from the Australian Competition and Consumer Commission (ACCC) Retail Electricity Pricing Inquiry. If implemented, the recommendations will reduce electricity prices by at least 20-25 per cent Australia wide by 2020-21, bringing significant cost relief to Australian households, businesses and farms.