Water woes cut Hydro power base

Hobart Mercury
Wednesday 3/9/2008 Page: 3

TASMANIA is heading towards summer with its lowest water storages on record, compounding the financial crisis of a drought dogged Hydro. The record dry means the state will be even more reliant on imported power and gas, which will put more pressure on power prices. Hydro Tasmania has had one of its driest winter periods on record and if trends continue until the end of the year the state will have experienced its driest three-year period ever measured.

Hydro's energy resources manager David Marshall said water storages stood at 22.4 per cent compared with 26.8 per cent at the same time last year. "Our storages are currently the lowest we have seen at this time of year, which is concerning as we head into summer," he said. "August has been disappointing and we are looking to some strong spring rains to build up storages leading into the traditionally drier summer and autumn months." He warned Tasmania would be more reliant on importing energy via Basslink and gas from the Bell Bay Power Station.

"As long as we have adequate inflows, the continued operation of Bell Bay Power Station and the ability to import across Basslink, we are confident we can maintain security of supply without any form of power restrictions," he said. Generation from non-hydro sources had provided 38 per cent of the state's energy this year. That included 11 per cent from gas, a net Basslink import of 24 per cent and 3 per cent from wind energy.

Mr Marshall said it cost $100 million last financial year to secure power supplies and a similar result was expected this year. Hydro spokeswoman Helen Brain said the financial implications of the dry spell would not be fully known until figures were drawn together in October. She said the cost of maintaining supply continued to have a significant financial impact on the business. The Government is officially the proud owner of a gas-fired power station.

Treasurer Michael Aird yesterday confirmed he had signed the sale and purchase agreement for the Tamar Valley Power Station on Monday. Mr Aird said all of the due diligence required was completed. The Government has portrayed the buy as a great deal, buying the asset for $100 million. But it could cost a further $300 million to complete the half built project.