Storm over interstate power deal

Hobart Mercury
28 January 2011, Page: 3

MOST cut-price power bought by the State Government from a Queensland electricity retailer will come from Tasmanian dams and then be sold back at a discount rate. It has raised questions about why power from Tasmanian taxpayer owned electricity companies. Hydro Tasmania and Aurora Energy cannot be sold at the same price, given residents and small businesses do not have the option to shop around for electricity.

The Greens yesterday accused Labor of betraying electricity users by signing the "grubby" deal to buy the cheap power from Queensland retailer ERM Power instead of struggling Aurora Energy. The Mercury yesterday revealed that the State Government will buy $16.4 million of electricity from Queensland company ERM Power at half the price it would pay Aurora Energy.

The tender, awarded in January, gives ERM Power supply rights to some of the state's biggest departments, including Primary Industries, Parks, Water and Environment, Police and Emergency Management, Economic Development, Tourism and the Arts, Premier and Cabinet, Education and Justice. The 160GWs of energy will mostly be generated here but extra can be imported via the Bass Strait power cable Basslink, which costs Hydro Tasmania about $92 million a year.

Based on the average price of 06¢/kW charged by Aurora Energy for business customers, the new government contract is less than half price at an average rate of 10¢/kW and will provide the equivalent of the power used by 16,000 homes a year. Cabinet minister Nick McKim has been outspoken against Basslink and use of non-renewable power but now, under the new deal, all of Mr McKim's departments are powered by ERM Power.

Opposition energy spokesman Matt Groom asked why power at Hydro Tasmania and Aurora Energy cannot be sold at the same price. "How is it that ERM Power can buy power from the State Government's own taxpayer-funded generators and sell it back to the very same people at a bargain basement price?" Mr Groom said. Energy Minister Bryan Green attacked the Liberals for opposing the deal, given that they supported the state entering the competitive energy market.

"ERM Power's power-price contracts with Tasmanian customers will not affect the source of power supply, rather power will continue to be largely generated by renewable sources from within Tasmania", Mr Green said. He said a review into the state's energy sector was under way and would report by August.

Greens MP Kim Booth was infuriated: "I'm absolutely stunned and horrified that the Government would engage in a secret deal to effectively betray the mum and dad electricity consumers in Tasmania, who are the ones who will pay the cost for this grubby deal".