Hydro blames big dry for $58m loss

Hobart Mercury
Tuesday 28/10/2008 Page: 7

Hydro Tasmania has blamed poor rainfall for a massive $58 million operating loss for the past financial year - only months after the State Government injected $270 million into its ailing energy business. The Hydro said keeping the lights on in Tasmania had cost it an extra $120 million. The Tasmanian government business had bought extra power, including 2264 gigawatt hours imported over the Basslink undersea cable from coalfired power stations interstate.

Tasmania exported 236GWh of the 7158 GWh hydro storages were able to generate. Hydro chairman David Crean said it was a tough year. "The last three years has been the driest three years on record," he said. "This has impacted on Hydro's cash flow." After operating expenses, the company was left with a net cash flow of $24.9 million. Because of new accounting standards, Hydro assets increased in value, which means the company made $158.9 million in profits after tax.

The State Government's $270 million injection meant the company was able to reduce its debt from $1.141 billion to $878 million. "It would have been some $200 million less if we had average rainfall over the last two years," he said. "This demonstrates in a very stark manner the importance of average rainfall to the finances of Hydro Tasmania." Dr Crean said the company was potentially in a strong position because it was the country's largest renewable energy business.

Chief executive Vince Hawksworth said Tasmania was forced to import 20 per cent of Tasmania's power demand last year. He said the low storage situation had restricted Hydro's ability to export to Victoria. To maintain Tasmania's supply, he said the business continued to import power at a significantly higher cost than it could sell to major industrial customers under existing longterm contracts. Mr Hawksworth said the impact of this was major lost revenue to Hydro and pressure on the future price of power.

Opposition energy spokesman Peter Gutwein said the State Government must help Tasmanians become more energy efficient. He said a reduction in demand would reduce Hydro's dependence on importing dirty, expensive energy from coal-fired power stations. "If we become energy efficient now, Tasmania will be better placed to potentially export clean hydro power to the mainland at a premium when storage levels finally improve," he said.