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Category: Rural / Agribusiness / Electricity Energy and Utilities / Hydro Energy

Dairy farmer fears Tasmanian power price hikes could put him out of business

Friday, 4 Mar 2016 09:24:08 | Laura Beavis

The cost of keeping cows fed may become prohibitive for dairy farmer James Downie. (ABC News: Pip Courtney)

A Tasmanian dairy farmer fears the state's energy crisis could threaten his farm's profitability.

Derwent Valley farmer James Downie's electricity contracts expired last month and he told 936 ABC Hobart under his new contract his power bill may be $80,000 higher this year.

"It's going to be going up between $40,000 and $80,000, and so it could go from $120,000 to $200,000 a year," he said.

"That'll be terrible for us. We're not a big business by any stretch, so I can do a lot with $80,000 or more, and that would be a big impact on my business."

He said he would struggle if he had to, on top of running his dairy, run his irrigation system for nine months of the year at the higher prices.

"I've had to start irrigating in August before and finish in June, and if we get one of those [years] then, yeah, it could be a disaster," he said.

Marc White from Goanna Energy Consulting said Tasmania's wholesale electricity prices increased as dam storages decreased.

He said the protracted Basslink fault has forced Hydro Tasmania to lower dam levels more quickly.

This caused a surge in the price at which retailers Aurora Energy and ERM buy power, which they then passed on to businesses, Mr White said.

The wholesale price has gone from last year around four cents a kilowatt hour, to currently in excess of 25 cents a kilowatt hour.

Marc White, energy consultant

The wholesale price had risen by more than 500 per cent in the past year, he said.

"So the wholesale price has gone from last year around four cents a kilowatt hour, to currently in excess of 25 cents a kilowatt hour," Mr White said.

Mr White said Tasmanian businesses who had not already locked in long-term power contracts could face high prices in the first half of this year.

"Most of the larger business customers have been aware of these changes and have acted quickly to get into contracts," he said.

"Unfortunately, what we've seen is some small businesses, and particularly farm industrial businesses, have found themselves out of contract with little choice but to enter into new contracts at much higher rates."

Mr Downie also urged farmers to check their energy contracts and negotiate new agreements early.

"I didn't know that I could have negotiated a price earlier, and if I'd done that, obviously before Basslink had got down, I probably wouldn't be in this situation," he said.

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