Businesses in South Australia's Riverland are pushing to change a system that has some paying hundreds of thousands of dollars extra in power bills — largely due to the laws of physics and how the energy operator accounts for it.

Key points: When electricity flows along power lines, around 10 per cent is lost in the form of heat

When electricity flows along power lines, around 10 per cent is lost in the form of heat The Australian Energy Market Operator calculates how much power is lost across the country

The Australian Energy Market Operator calculates how much power is lost across the country That cost is particularly high in SA's Riverland because it hosts lines that export power to Victoria and NSW

Much of the state's electricity has to travel vast distances to get to regional areas, or across vast distances to state interconnectors in Victoria and New South Wales.

But when electricity flows through power lines, a portion of it is lost in the travel process in the form of heat.

This loss is then calculated by the Australian Energy Market Operator (AEMO) using a mathematical equation to come up with a figure known as Margin Loss Factors (MLFs).

AEMO says, generally speaking, the losses represent the difference in the level of energy produced to what is left when it is consumed — typically as much as 10 per cent.

How Riverland wears the cost

While the charge for this loss happens across the country as customers tap in to the network for their electricity needs, in the Riverland the financial impact has been significant as it hosts lines that export to Victoria and NSW.

Riverland is the home to the Berri transmission lines, attracting the second highest MLFs in the country.

And Riverland businesses, which tap into those lines, pay for their sizeable transmission losses.

What are electrical losses? Whilst high voltage conductors transport electrical energy wonderfully efficiently, sadly they still lose some of it along the way in the form of heat. Typically around 10 per cent of the energy that leaves a power station never makes it to a consumer. It is a simple fact that extra power must be generated to cover losses, and this generation must be paid for. Fortunately, a power system's loss characteristics can be accurately calculated in a loadflow model, a tool that AEMO uses to calculate Margin Loss Factors (MLFs). MLFs are the way these losses can be expressed to participants in an electricity market, driving them to collectively manage losses. Source: Marginal Loss Factors: Will someone please repeal the laws of physics? Australian Energy Council

Renmark's Central Irrigation Trust (CIT) estimates that between just six local businesses, $1 million could be spent to cover losses this year alone when SA exports large amounts of power to Victoria.

"Most of the large industrial consumers of power up here are having really volatile losses," CIT chief executive Gavin McMahon said.

"We think it's highly unfair.

"If there are losses associated with exporting from South Australia into Victoria, then really everybody in the state should pay. Not just the businesses up here [in the Riverland]."

The most expensive MLFs in the country are also in South Australia in the Pimba region, on lines that terminate to the far north-west of Adelaide.

Businesses close to folding

Renmark grape grower Ray Hartigan said the increasing cost of power was driving his business into the ground.

Renmark grape grower Ray Hartigan says he and his colleagues around the region are frustrated with the current situation. ( ABC Riverland: Catherine Heuzenroeder )

He said, coupled with low water allocations forecast for the season, he was enduring incredibly difficult times.

He said he was not the only one.

"[The definition of] 'child abuse' here [in this region] is leaving your property to your children. How bad is that?" Mr Hartigan said.

"It can't continue. My children will leave the region. I'll pull out my grapes and leave a dustbowl here.

"Climbing costs [and] diminishing returns are never good for business."

Renmark's CIT said it was in discussions with AEMO, state and federal governments, and the Australian Energy Market Commission on behalf of the region's large businesses about the large financial losses they were suffering.

And AEMO has acknowledged the issue — but not the way the losses are calculated.

"The way we apply losses and the rules that we could put in place — to put consumers and generators into a position to manage their losses going forward — are all things that need to change," AEMO chief executive Audrey Zibelman said.

CIT estimates the costs associated with energy losses from exports will cost one business $200,000 for 2019/20 alone. ( Supplied: Melissa Macgill )

While AEMO said it was able to participate in the discussions, it said it was not in a position to effect change.

"We're certainly happy to work with the Riverland and with the state [South Australia] to address their economic issues, but we're not the decision maker," Ms Zibelman said.

Ms Zibelman said one short-term change for Riverland businesses could be to redefine the region's boundaries, thus averaging the losses across a wider region.

In a statement to the ABC, the State Government said it "has discussed the impact of these losses with CIT and with the market operator" AEMO.

Mr McMahon said the Central Irrigation Trust would continue to vigorously pursue any further options for change.