RISING electricity costs are likely to punch a hole in efficient irrigation practices and become one of the highest input costs for growers.
Central Irrigation Trust chief executive Gavin McMahon says energy charges for its pressurised water delivery system have nearly doubled in the past three years and will increase by about $351,000 in the next 12 months.
He says about 25pc is down to ETSA network charges, which are significantly higher in 2012-13 because of its responsibility to recoup costs on behalf of State Government for the solar Feed-in Tariff scheme, and will increase by $37,500 to $198,580.
Other expenses include the carbon tax ($38,727) and supporting SA's contribution to the Federal Government's Renewable Energy Targets scheme ($18,727).
"We've got a cheaper retail price for the coming year (down from $107,786 to $90,139), but there is a substantial increase in our power bill," Mr McMahon said.
"And the customers we have to pass it on to are farmers. "The vast majority of their product is being sold overseas, and they're competing against countries that have got lower power prices that us.
"How can this continue?"
He said water reform in the Murray Darling Basin was potentially under threat from the higher electricity prices. "The pressurised pipeline systems are the most efficient delivery systems you can get, however, to put water in the pipeline and push it around requires energy," Mr McMahon said.
"The result is that while irrigators are becoming more efficient, cost structures are starting to blow out as a result.
"I know of some upstream areas that were looking at pipelining some areas and are now looking at either not doing it, or doing it at low pressure so they can reduce or minimise the impact of electricity increases."
Renmark Irrigation Trust runs on a low-pressure piped system, but costs will still increase in the next financial year.
Chief operations officer Barry Schier says overall electricity costs would go up by between 27 per cent to 35pc, costing an extra $70,000 in 2012-13.
"It's pretty drastic," he said.
"We'll manage to absorb some of it, but we'll probably pass the rest on in costs."
Chairman Peter Duggin said most of the trust's members pressurised the water themselves and would therefore wear the costs of higher electricity prices.
"And individuals would notice it because they would still be pumping at the same time as normal but at much higher rates as the electricity is much dearer for them," he said.
"All growers pay what are basically retail prices.
"On-farm, it's very hard to cut a deal because you're just not big enough."
Recently, the Essential Services Commission of SA approved a standing contract price increase of 18pc in average electricity retail costs for 2012-13.
It takes into account network charge increases from ETSA Utilities tariffs - 2.5pc for distribution and 0.2pc metering - and ElectraNet transmission tariffs of about 0.8pc to create an overall $107.6 increase in network charges for the average small business electricity bill of 10 megawatt hours per annum.
It also includes a 4.8pc increase ($139.7 on average) due to the carbon tax, which starts on July 1, and 7.3pc increase due to the FiT ($214av).
The commission also promised an investigation into the wholesale electricity component of retail costs, admitting its long run marginal cost approach to determining retail prices may no longer be accurate.
An ETSA Utilities spokesperson said the main issue for CIT was the fact it pumped water during peak times when electricity was at its most expensive.
"They have come to us in the past couple of years about the increasing network charges and have a real issue in changing their consumption patterns," he said.
"Their growers are wanting water on hot days in the middle of the day.
"We understand that, but they are requiring supply at the peak time of day."
The spokesperson said the main driver behind ETSA's increases was spending towards meeting peak demand capacity requirements - representing 65pc of its investment.
"Energy use overall is pretty flat, if not falling," he said.
"But on peak demand days, it is growing and that is a capacity issue.
"About 20pc of the network capacity is there to meet a bit less than a day's demand - about 23 hours of the year during those one or two very hot days."
And the increases were not expected to plateau once infrastructure was upgraded.
"There is not an expectation that growth in peak demand will slow and, at this stage, it is still forecast to grow, but that's also subject to efforts being made to look into the area of demand management.
"Businesses are often good at managing demand and that's why they can actually get a good arrangement with us if they can actually manage when they're taking on supply."
*Full report in Stock Journal, June 28 issue, 2012.
