Revised prices mean more angst for irrigators

SunWater revises pricing estimates for Queensland Competition Authority review


Irrigation
Revised SunWater forecasts could mean bigger price hikes for Queensland irrigators.

Revised SunWater forecasts could mean bigger price hikes for Queensland irrigators.

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The price increases are 'substantially greater' than those some schemes currently face.

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Revised SunWater forecasts could mean bigger price hikes for Queensland irrigators who are already concerned about rising water costs.

The Queensland Competition Authority is currently reviewing irrigation prices charged by state-owned utility SunWater.

Last year SunWater outlined its proposed future price paths, with producers saying the "pretty scary numbers" spelt trouble for irrigators.

Last month SunWater revised these prices, which could result in even larger price hikes for some schemes.

A research note circulated among the Wide Bay Burnett Regional Organisation of Councils summarised the effect of SunWater's revisions.

"SunWater have revised upwards their proposed water price increases to the QCA review currently underway and due for draft- release in August," the note read.

"The magnitude of these increases is substantially greater than the original proposal and could significantly impact the viability of a large number of irrigators across the region."

The research showed that, between 2019 and 2021, individual irrigation schemes in the region faced increases ranging from 1.9 per cent to 142 pc.

"The rate of increase applied in 2021 will pose a significant cashflow impost beyond many irrigator's capacity to pay potentially contributing to industry contraction and greater cost burdens on remaining water users," the research noted.

A SunWater spokeswoman said the forecasts had been updated based on the organisation's latest budget.

"As part of our commitment to transparency and due to ongoing review timeframes, we updated the forecast costs and provided a revised regulatory model to QCA on 17 June 2019," she said.

"QCA will examine the updated costs to ensure only those that are prudent and efficient are recovered from customers when they put forward their recommended irrigation prices for 1 July 2020 to 30 June 2024."

In its latest submission, SunWater said cost forecasts had been revised to incorporate factors such as rising insurance premiums and a greater focus on direct charging of labour to service contracts.

Earlier this year Canegrowers Isis chair Mark Mammino, a third-generation farmer with a 300 hectare cane operation near Childers, said the price hikes proposed by SunWater were "pretty scary numbers" for some schemes.

The rising cost of water became particularly problematic when paired with electricity costs, he said.

"It could change the way people operate on-farm," he said.

Under the previous SunWater model, the Callide scheme faced the biggest price jump, with a $74 per megalitre difference between the current price path and SunWater's cost-reflective price in 2020/21, according to Queensland Farmers' Federation modelling.

Eton ($68/ML), Lower Mary ($44/ML), Barker-Barambah ($44/ML), Bundaberg ($34/ML) and Three Moon Creek ($33/ML) are the other schemes facing significant differences between current prices and proposed cost-reflective prices.

The story Revised prices mean more angst for irrigators first appeared on Queensland Country Life.

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