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Power problems more than a mere inconvenience for farmers

16 December 2016

The National Farmers’ Federation has welcomed the outcomes of Wednesday’s COAG Energy Council meeting but urged Governments to go further in achieving meaningful power reform for Australian farmers.

“The National Electricity Market is not working for Australian farmers,” Acting Chief Executive Officer Sarah McKinnon said.

“Farmers need reliable and affordable power to maintain profitability in the longer term.”

“A power outage is more than a mere inconvenience for farmers. It can mean the loss of a whole season’s work.

“For example for a summer fruit grower in the midst of picking – needing to store harvested fruit on farm, an extended outage could spell disaster.”

“Exorbitant power price rises will also jeopardise the international competitiveness of Australian food and fibre producers in valuable export markets.”

Ms McKinnon said the NFF recognised the nation’s energy mix needed to change – to replace old assets, meet emissions reduction targets and to cater for the growing need for LNG across Asia and beyond.

“However our domestic energy markets need to be flexible and resilient in the face of these challenges and the trade-off between reliability and affordability needs to be carefully balanced – neither goal can be pursued at any cost.”

The meeting of Federal and State Energy Ministers’ agreed to pursue a number of reforms including a tightening of network businesses’ access to the Limited Merits Review regime.

“We also welcome the Council’s agreement to increase consumer participation in reviews and make network business cover review costs – this will reduce the capacity for these large companies to unfairly saddle energy users with higher costs,” Ms McKinnon said.

The Ministers supported the findings of a review of Australia’s National Electricity Market by Dr Alan Finkel AO. The Finkel Review highlighted the need to strengthen the security of the NEM and Minister’s agreed to fast track a measures to achieve this.

The meeting acknowledged the requirement to modernise Australia’s gas market so that supplies can be increased to meet the surges in domestic and export demand and to balance the need for new supplies with responsible behaviour of gas companies, robust science and thorough approval processes.

Ms McKinnon said energy security and affordability were becoming an increasingly serious issues for the nation’s ag sector.

“Both a lack of reliability and affordability can have damaging impacts on agriculture supply chains profitability and encourage the shift to self-sufficiency’

“An increase in users going off-the-grid’ will only escalate prices for those remaining in the system.”

Ms McKinnon said the transition to renewables also needed to be carefully managed.

“Currently the Renewable Energy Targets deliberately favours renewable energy and disadvantages others in the electricity generation sector and there are no incentives to invest in technologies.

“The regime is having the effect of eroding our baseload capacity and ironically reducing the ability of the system to handle increased intermittency that comes with a greater share of renewables,” Ms McKinnon said.

The National Farmers’ Federation is currently consulting with its members to develop a detailed energy policy platform for agriculture.

PLEASE SEE ATTACHED ADDITIONAL BACKGROUND INFORMATION ON AUSTRALIA’S ENERGY SYSTEM AND THE IMPACTS FOR AGRICULTURE

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