Draft Determination Regulated Electricity Prices

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05 April 2018 Queensland Cmpetitin Authrity GPO Bx 2257 Brisbane QLD, 4001 Dear Sir/Madam, Draft Determinatin Regulated Electricity Prices 2018-19 Cttn Australia welcmes the pprtunity t prvide cmment

1 05 April 2018 Queensland Cmpetitin Authrity GPO Bx 2257 Brisbane QLD, 4001 Dear Sir/Madam, Draft Determinatin Regulated Electricity Prices Cttn Australia welcmes the pprtunity t prvide cmment n the Queensland Cmpetitin Authrity s ( QCA ) Draft Determinatin Regulated Retail Electricity Prices fr This submissin will address the fllwing issues and make the fllwing recmmendatins: Transitinal & Obslete Tariffs Recmmendatin: Escalatin f transitinal and bslete tariffs is ceased and that transitinal and bslete tariffs are extended s that thse custmers wh are n thse tariffs may remain n and have access t thse tariffs. Recmmendatin: Transitinal and bslete tariffs shuld be pegged t standard business tariff, and therefre enjy the same reductin. If the QCA deems this is nt pssible, they shuld be reduced applying the same frmula in the inverse as has been used t escalate in the past. Recmmendatin: Large users currently able t access transitinal vlume-based tariffs, shuld be allwed nging access t vlume-based tariffs rather than being frced t migrate t demand-based tariffs under the fllwing cnditins: There is n custmer-initiated request t upgrade supply t the metering pint; Ownership f the prperty remains with the riginal tariff hlder; Demnstrated effrt by Ergn and the custmer t cmpare tariffs and there is evidence that remaining n a vlume-based tariff is the mst cst-effective ptin. Recmmendatin: All custmers currently n transitinal and bslete tariffs shuld receive clear tariff cmparisns n each bill. Each bill shuld prvide three alternative tariff cmparisns. Metering Recmmendatin: The Queensland Gvernment shuld expedite the adptin f smart metering thrugh investment. Recmmendatin: It shuld be clearer t custmers that the metering charge is nt a new charge. 1

2 Headrm Charge Recmmendatin: The 5% headrm charge impsed n tariffs shuld be remved. General Recmmendatin: The Gvernment extend its three-year cmmitment t remve the cst f Slar Feed-in tariff frm the regulated price and fund it frm general revenue. Backgrund Cttn Australia, is the peak natinal bdy representing cttn grwers and ginners. While, Queensland s cttn prductin is highly variable, the State s 600 grwers ften prduce between 1 millin and 1.5 millin bales each year. The value f that prductin ranges between $500 millin and $900 millin (including the value f cttn seed) farm gate annually. Our grwers in Queensland reside thrughut Suth-West and Central parts f the state. Energy and water are the key inputs fr ur industry s prductin. Cttn Australia, is an active member f the Queensland Farmer s Federatin ( QFF ) and endrses its submissins regarding this Draft Determinatin. If there are any perceived incnsistencies in psitin between rganisatins, the psitin expressed in this submissin is that f Cttn Australia s. While Cttn Australia welcmes the pprtunity t prvide cmment, we remind the QCA f ur engagement and submissins made ver the last seven years. The respnse by the QCA t ur engagement regarding the previus Draft Determinatins t date has been disheartening. Cttn Australia are active participants and heavily engaged in cnsultatin prcesses relating t energy. We have cnsistently respnded t QCA discussin papers and have engaged fully with the Australian Energy Regulatr ( AER ) revenue determinatin fr Ergn in additin t the Queensland Prductivity Cmmissin ( QPC ) Electricity Pricing Inquiry. Cttn Australia, is als a member f the Regulatry Prpsal and Tariff Structure Statement wrking grup and an invitee f the Agricultural Frum, bth established by Energy Queensland. It is disappinting that despite ur active engagement with cnsultatin prcesses we are failing t see ur cncerns be heard. Cttn Australia has engaged in gd faith and with the expectatin f psitive actin n electricity prices in reginal and rural Queensland. The QCA has a legislative mandate t set a framewrk fr all electricity industry participants that prmtes efficient ecnmical and envirnmentally sund supply and use 1. We urge the QCA t diligently cnsider Cttn Australia s recmmendatins t address ur industries cncerns arund ecnmic and envirnmental electricity use. Specific Issues Transitinal & Obslete Tariffs Ceasing r Extending f Transitinal & Obslete Tariffs We nte the Queensland Gvernment s ppsitin t extending any transitinal perid and their subsequent investment f $10 millin t assist reginal businesses transitining int standard business 1 Queensland Cmpetitin Authrity, Draft Determinatin: Regulated retail electricity prices fr , page 4. 2

3 tariffs. Althugh, Cttn Australia is supprtive f this funding which QFF called upn in its submissins last year, it fails t slve the pricing prblem that ur grwers face, nw and beynd the transitinal tariff perid. Cttn Australia s psitin has nt changed frm previus submissins relating t QCA s fixed transitinal tariff perid. The financial effect n ur grwers nce the prpsed 2020 transitinal tariff perid expires will be crippling. Cttn Australia, anticipates that sme grwers face increases f 300% n their bills, as was reflected in mdelling by Ergn. This will frce ur grwers, Ergn s custmers, ff the grid and int alternative energy surces such as diesel. This results in unused infrastructure and a lss f revenue t the retailers and netwrks - a lse, lse situatin fr all stakehlders. It is essential that this Determinatin and the Queensland Gvernment act nw, t identify and prepare a pathway which will allw severely impacted users t remain n the grid. The QCA is required t cnsider maintaining these transitinal and bslete tariff arrangements beynd Cttn Australia, reiterates its psitin that the QCA shuld maintain these tariffs int the future, beynd 2020, r as an alternative ensure that existing custmers facing frced transitin t demand based tariffs, have the ptin f cntinued access t vlumetric based tariffs, where it is clearly demnstrated that it is in the custmers bets interest.. Recmmendatin: Escalatin f transitinal and bslete tariffs is ceased and that transitinal and bslete tariffs are extended s that thse custmers wh are n thse tariffs may remain n and have access t thse tariffs. Pegged Tariff Pricing The QCA s apprach that was adpted in t maintain transitinal and bslete tariffs at existing price levels while standard business tariffs are frecast t decrease is ppsed. Cttn Australia submits that the QCA shuld adpt the methd that the escalatin factr applied t the pricing frmula shuld be applied in reverse; the tariffs shuld be pegged. Whatever the calculated escalatin factr fr that year is, if it can be applied t bring the pricing level up, it shuld als wrk t bring the pricing dwn fr all tariffs. Fr example; if business tariffs receive a 4% reductin, an escalatin factr f 1.5 (applied in reverse) wuld result in a reductin fr transitinal tariffs f 2.66%. This apprach is within the QCA s legislative ambit and is cnsistent with the Queensland Gvernment s Unifrm Tariff Plicy (UTP). The UTP states that standard cntract custmers shuld pay n mre fr their electricity, regardless f their gegraphic lcatin 3. T be abslutely clear, Cttn Australia s psitin has cnsistently been that transitinal tariffs shuld nt have escalatin factrs applied, and this remains the case. Hwever, Cttn Australia acknwledges that the QCA have decided t apply escalatin factrs in the past, and at the very least, t remain cnsistent, they shuld be applied in reverse when price decreases ccur. Recmmendatin: Transitinal and bslete tariffs shuld be pegged t standard business tariffs. The frmula used t frecast increases in tariff pricing shuld have the ability t be 2 Sectin 90AA(1) Electricity Act 1994 (Qld) Ministers Delegatin Terms f Reference (5)(e) 3 Sectin 90AA(1) Electricity Act 1994 (Qld) Ministers Delegatin Terms f Reference (5)(b) 3

4 applied in reverse, if standard tariff pricing is frecast t decrease the transitinal and bslete tariffs shuld be decreased at the same cmparative rate t prvide a reductin. High Pricing and Abandned Infrastructure Cttn gins and irrigatrs have been actively engaged in gvernment initiatives t mitigate their rising electricity prices. Many have installed and adpted energy efficiency measures and invested in renewable energy technlgy such as slar. Hwever, in many cases these practive measures have been nullified by cnstant rising electricity csts 4. Cttn Australia accepts that it is fair and reasnable fr demand-based tariffs t apply t new users. The cncept f Lng-Run Marginal Cst is t ensure the cst f investment is returned. Hwever, it is ecnmically irrespnsible t frce existing custmers ff the grid, where capital investment has already been made, in blind pursuit f market-based ecnmics. A perverse utcme f the current situatin is irrigatrs being frced ff the grid due t unsustainable pricing and turning t alternative energy surces. Cttn Australia, accepts that nt all irrigatrs will be wrse f n cst-reflective tariffs. Hwever, the result f custmers leaving the grid, shuld be a majr cncern fr Gvernment and its Gvernment Owned Crpratins. The cncern fr gvernment is the death spiral 5. Escalating prices encurage users t leave the netwrk and invest in alternative energy surces. The flw n effect is unused infrastructure and further increased prices fr thse remaining n the grid, pushing mre users ff the grid 6. Additinally, there is an envirnmental impact f increased emissins thrugh transitin t diesel pumps. QCA, has a legislative bligatin utlined in Sectin 3(a) f the Electricity Act 1994 (Qld) t prmte ecnmical and envirnmentally sund supply and use. Recmmendatin: Large users currently able t access transitinal vlume-based tariffs, shuld be allwed nging access t vlume-based tariffs rather than being frced t migrate t demand-based tariffs under the fllwing cnditins: There is n custmer-initiated request t upgrade supply t the metering pint; Ownership f the prperty remains with the riginal tariff hlder; Demnstrated effrt by Ergn and the custmer t cmpare tariffs and there is evidence that remaining n a vlume-based tariff is the mst cst-effective ptin. Cmparable Tariffs Cttn Australia, prpses that Ergn and Gvernment redevelp their tariff cmparisn tl available thrugh websites, t assist transitinal tariff users. S that users can decide what is the mst csteffective tariff (in preparatin fr the lss f Transitinal Tariffs in 2020). 4 Farm Online Natinal, Taskfrce warning ver lack f affrdable electricity netwrk < 5 QFF, Refrm Needed t Halt Grid Death Spiral, < 6 Grattan Institute, Dwn t the Wire: A sustainable electricity netwrk fr Australia < 4

5 Cttn Australia submits that the easiest and mst direct way t actively cmpare tariffs wuld be fr Ergn t prvide a tariff cmparisn attached t each bill. This culd be illustrated thrugh a table that prvides three alternative tariff structures relative t the current tariff the user is n. Metering Recmmendatin: All custmers currently n transitinal and bslete tariffs shuld receive clear tariff cmparisns n each bill. Each bill shuld prvide three alternative tariff cmparisns. Cttn Australia supprts the mve t smart metering and submits that the Queensland Gvernment shuld fast track the adptin f smart metering thrugh investment. The mre custmers with smart metering technlgy, equates t mre data. The mre data available can be used t infrm mre decisins arund pricing and demand levels. Cttn Australia, submits that it shuld be made clearer that the inclusin f the metering charge was previusly built int the retail price and it is nt a new charge per se. Where the separatin f the metering charge has led t a reductin in the verall cst f electricity that shuld be clearly identified, and vice-a-versa. Recmmendatin: The Queensland Gvernment shuld expedite the adptin f smart metering thrugh investment. Recmmendatin: It shuld be clearer t custmers that the metering charge is nt a new charge. Headrm Charge As previusly submitted, Cttn Australia rejects the inclusin f a headrm charge under the auspice f enhancing a cmpetitive envirnment. Cttn Australia has and will cntinue t call fr the remval f this tariff cmpnent. Cttn Australia s remval f the headrm charge is premised n tw lines f reasning: 1. The prvisin f a headrm charge is t allw retailers rm t ffer discunts, t help develp an atmsphere f cmpetitin. In the Ergn Netwrk area there is n effective cmpetitin fr the vast majrity f users. Therefre, making the headrm charge redundant. 2. Cmpetitin shuld be funded by innvatin and efficiency, nt by artificial inflatin f the price. The applicatin f a 5% headrm charge is n different t a retailer increasing prices by 5% ne day, s it can ffer a 5% discunt the next. Further, there is a gd argument t shw that the use f the SEQ standing ffer price t set the retail cmpnent is inflated by apprximately 5% ver the price accessed by the vast majrity f users. The remval f the headrm cmpnent wuld bring the cst in line. Recmmendatin: The 5% headrm charge impsed n tariffs shuld be remved. 5

6 General Cmments Cttn Australia welcmed the mve last year by the Queensland Gvernment t remve the cst f the Slar Feed-in Tariff frm the regulated price and fund it frm general revenue. The previus arrangement actually penalized the peple wh were getting n benefit frm the feed-in tariff. Cttn Australia ntes this was a three-year cmmitment, and it strngly recmmends that this cmmitment is extended. Recmmendatin: The Gvernment extend its three-year cmmitment t remve the cst f Slar Feed-in tariff frm the regulated price and fund it frm general revenue. Fr further infrmatin n this submissin please cntact Michael Murray michaelm@cttn.rg.au r Yurs sincerely, General Manager, Cttn Australia 6

Queensland Rail's 2012 Draft Access Undertaking. New Hope Corporation submission

Queensland Rail's 2012 Draft Access Undertaking. New Hope Corporation submission New Hpe Grup A Divisin f NEW HOPE CORPORATION LIMITED ABN 38 010 653 844 Cntact Direct Phne: +61 7 3418 0572 Direct Fax: +61 7 34180 372 Email: gclarke@newhpecal.cm.au Website: www.newhpecal.cm.au New