The National Irrigators’ Council (NIC) says the Australian Energy Market Operator’s (AEMO) allocation of charges is inequitable, after infrastructure failures in Victoria left a South Australian Irrigation company with a 26,000% increase in, so-called, ‘ancillary charges’ between July 2019 and March 2020.

The latest increased charges were passed through to customers after infrastructure failures in Victoria left South Australia without an operating interconnector. 

Central Irrigation Trust received notification on 2 April of increased “AEMO – Ancillary Charges” – from 1.3842 c/kWh in February to 2.352 c/kWh, backdated to 1 March 2020. This was accompanied by the helpful advice that the best way to reduce costs was to reduce consumption. In July 2019 the same charge was 0.009 c/kWh.

This latest, one month, 70% increase in ‘ancillary charges’ resulted in an overall increase of 25% in the irrigators price of consumption.  A $60,000 per month increase in their bill.

NIC CEO Steve Whan said “this is another example of energy market rules with scant regard for the national interest.  NEM rules say these charges can be passed on, even though the consumer had nothing to do with the problem that caused the additional cost.

“Central Irrigation Trust pumps water from the Murray to supply 1,200 Riverland fruit, vegetable, grape and nut farmers. The electricity costs paid by the Trust have to be passed on to farmers making their cost of production prohibitive.

“Irrigation companies and farmers have worked to be as efficient as possible in water use, they also minimise energy use, but being water efficient often results in using more electricity to run water efficient systems.

“Our farmers have worked through drought, extreme heat and now the disruption of COVID, to keep producing the food we need, and they should not have to put up with retrospective price increases due to someone else’s failure.

“This is not the first time irrigators have been slugged by sudden changes in AEMO charges. Last year the same company received news that a recalculation of Marginal Loss Factors meant their charges would rise $150,000 in one hit.  Again, nothing to do with their use, instead it was because South Australia was exporting more power to Victoria.

“It doesn’t seem to matter which way the worm turns; energy authorities can slug consumers, rather than those whose decisions are responsible for the increased cost.  Farmers and rural energy users are sick of market rules that feather-bed infrastructure owners at the expense of vital national industries like agriculture.”

Media Contact:  Steve Whan 0429 780 883
Tuesday 14 April 2020