Rural businesses switch to diesel power as electricity prices soar
Summary: "I'm pissed off and I've had a gutful."....
A long, dry summer is enough to frustrate any sugarcane grower, but Allan Dingle's anger is directed at the pile of electricity bills in front of him.
"You start to wonder why you get out of bed in the morning," he said.
Mr Dingle uses electric powered pumps to water his cane fields near Bundaberg, on Queensland's central coast, and the price to run those pumps has more than doubled over the past decade.
The soil here is rich-red and fertile and locals say, if you can add water, you can grow anything.
But as power prices rise, some farmers have been forced to turn off the pumps.
The local irrigators' council representative, Dale Hollis, is hearing that concern right across the district, and the country.
He says right now, irrigators have two options:
"They have to switch off the pumps and go back to dryland [cropping], and that impacts upon the productivity of the region and impacts on jobs," he said.
"The second option is to go off the grid and look at alternatives."
Another option is solar and there are plenty of farmers installing panels, but many growers irrigate at night and can't afford the millions of dollars it could take to buy battery storage.
That's pushing many of them back to a dirtier option.
"Right now, diesel stacks up," Mr Hollis said.
Bundaberg Sugar moving to diesel
Across the district, black power lines snake above cane fields that rustle in the breeze. But Simon Doyle says they may as well not be there if electricity prices continue to rise.
He's in charge of farm operations at Australia's most famous sugar company, Bundaberg Sugar, which produces 220,000 tonnes of raw sugar every year. Gradually switching to diesel is saving the company some serious coin.
Diesel pumps aren't pretty. One spits out fumes as it whirs into life, but Mr Doyle says it's the only option for his company right now.
"When you're backed to the wall, you don't have the luxury of thinking about how environmentally friendly diesel is versus electricity," he said.
He's done the maths carefully and it's already 30 per cent cheaper to pump water with diesel than electricity.
"With what we understand electricity prices are going to do into the future, that number will become even greater," he said.
Farmers get a rebate from the Federal Government for diesel fuel, but even without it, Mr Doyle says diesel is still the most cost effective option.
For Mr Dingle, diesel has always been a good backup option, but he's worried about what it would mean to ditch electricity altogether.
He says electricity is "cleaner, more user-friendly, probably more reliable" and worries that abandoning the grid altogether will hurt his neighbours.
"If I went to diesel all I do is put my share of what I was paying before into the electricity prices, onto all my neighbours and their prices increase as well."
Power bills continue to grow
Rural businesses right across the country are grappling with the same issues.
Glen Dobinson's father started as a blacksmith in a backyard tin shed in Rockhampton, Queensland, in the early 1950s. Since then the company has grown dramatically; it exports springs and other four-wheel drive parts all over the world and employs more than 40 people.
He and his dad are "proud as punch" of how far they've come and now Glen Dobinson would like to take a step back to let the younger generation over.
But mounting electricity bills are making that difficult.
"Back in 2007, our power bill was about $100,000 to $110,000 year in, year out previous to that," he said.
"Now it's about $350,000 a year."
He's worried his bills could double again by 2020 as Queensland's regional electricity distributor, Ergon, changes the way it charges small businesses for power.
Mr Dobinson says that will mean a new daily service charge of $155,000 per year, and a new demand charge.
"Then we'll have our power bill on top of that," he said.
Like the irrigators in Bundaberg, he is being forced to consider cheaper alternatives like diesel.
"I feel like we're going back to the future," he said.
"My dad had diesel forges and other diesel running here in the old shop on the other side of town.
"I feel like we're going backwards."
Ergon says it's changing its tariffs to become more "cost-reflective", and to encourage consumers not to use as much power during peak periods.
Energy companies have previously said they needed to invest more money because electricity consumption was growing and they believed that would continue.
'Obvious conflict of interest for governments'
For the past eight years, companies said that investment was essential if they were going to meet that rising demand.
But the electricity market is unpredictable, says the Grattan Institute's Tony Wood.
"Electricity consumption had actually been falling for a whole range of reasons. And the question now is, who should pay for that?" Mr Wood said.
While power prices are causing concern across the country, Mr Wood says network prices have risen most sharply in Queensland and New South Wales, where state governments own energy companies.
"Now partly there's an obvious conflict of interest for governments. Do they put downward pressure on prices to help their consumers, or do they try to make money out of the companies they own?" he said.
"I think that's an unhealthy conflict and I think that's partly behind why we ended up with very high costs in Queensland and NSW."
Energy economist Bruce Mountain sees that conflict as more of a "racket".
He says state governments who still own electricity networks are raking in billions of dollars each from energy companies by using the national electricity market's pricing rules to their advantage.
Those rules mean the prices consumers pay are largely influenced by the value and estimated running costs of the individual electricity companies.
"The main reason why the network charges have risen is because the regulator's valuation of the network has risen, and that more expensive asset base has to be charged for," Mr Mountain said.
"They can reduce prices by revaluing those assets down closer to a market valuation."
Mr Wood says there's nothing wrong with turning a profit, but he points out that the national electricity market was designed so that energy companies, regulators and governments could develop and maintain a system that works in the long-term interests of consumers.
The Queensland Government is providing help for regional businesses affected by increased charges but business owners like Glen Dobinson say it won't help them.
"We don't know where to go. Honestly, it's my biggest bugbear. I want to keep employing local people and making a great product but without the direction and being competitive, I lose a lot of sleep."