Hydro rules out power rations fear

Hobart Mercury
Thursday 4/9/2008 Page: 3

Hydro Tasmania has ruled out power rationing despite the state's record dry. Chief executive Vince Hawksworth said rationing would only damage investor confidence in the industry's ability to meet demands. Hydro is in the grip of a record dry spell with water storages at just 22.4 per cent of capacity. It has been forced to buy 38 per cent of its power source from Basslink, gas and wind energy suppliers to compensate for its energy downfall.

The increased spending on outsourced power, which cost $100 million last financial year, is fuelling concern that power bills are poised to increase. Outsourcing power has also had a significant impact on the financial footing of Hydro and has renewed concern for its financial stability. Hydro used power rationing in the 1950s and 60s to overcome drought-related power shortages. Despite a $900 million debt, Mr Hawksworth said Hydro Tasmania was not in financial crisis.

He said the Government's recent transfer of $220 million of Hydro's debt to Transend had strengthened the balance sheet. "Consequently we have the financial reserves to manage the impact of the low inflows on our revenues," he said. Opposition energy spokesman Peter Gutwein said the Hydro's position was of grave concern. He called on the State Government to take a more proactive stance on energy conservation. "The Government must take a more strategic approach to power conservation and seriously consider energy conservation," he said.

Mr Hawksworth said while the situation was concerning, Hydro was making moves to ensure a stable future. "Low storage levels and drought are concerning, but we also have to think about the long-tern competitive future of Hydro," he said. "Sure we have short-tern issues to deal with but this is a long-term business that's been around for decades now and will be around for decades to come." The fears over power supply came as the Hydro announced yesterday it had invested $17.1 million in Victorian electricity retailer Momentum Energy.

Momentum sells accredited GreenPower sourced from wind generation to small to medium sized businesses throughout Victoria, New South Wales. Queensland and South Australia. Hydro has bought 51 per cent and the remaining 49 per cent will be bought in 2010. The investment is expected to secure financial gains for Hydro by tapping into the trend for businesses to turn green.