The Mercury Editorial, Oct 30
Questions remain about how a state utility was allowed to wager $2.3billion on the weather — without thoroughly checking the forecast.
HYDRO Tasmania can point to the heavens and blame the weather for some of its disastrous financial woes.
The Tasmanian government business is reliant on rain filling its dams to generate electricity.
The drought, which sees dam storages seriously low, has impacted severely on its capacity as a generator.
But the Hydro can only go so far blaming the weather. The predicament is of its own doing.
Use of the Basslink undersea cable to Victoria and the national electricity market is costing the Hydro $2.3billion over 25 years — an average $92million a year.
The Hydro is struggling with this massive obligation while keeping up with necessary maintenance programs.
The Hydro cannot pretend this scenario comes as a surprise.
Prolonged droughts are a part of Australian history and the issue of climate change caused by human-induced global warming has been here for more than 20 years.
By the mid-1990s, scientists from Australia, the United States and beyond were sounding alarms.
By 2002, the United Nations Intergovernmental Panel on Climate Change had prepared scientific reports with clear and unambiguous conclusions about the threat.
If ever there was a project that was potentially subject to the impact of climate change, it was Basslink.
The business case looked forward a quarter century and revenues were weather-dependent.
But during the Resource Planning and Development Commission assessment of the project, the Hydro conceded no specific climate-change modelling was done for the project.
It was not until years later, after the project was given the go-ahead, the Hydro and the University of Tasmania did some fundamental research into the issue.
On the grounds of this research, the Hydro has dismissed the issue as little cause for concern.
But within weeks of Basslink’s commissioning in 2006, it was revealed the Hydro had requested $300million from the State Government to prop up its ailing balance sheet.
The Hydro, almost unbelievably, now wants a staggering $450million.
Tasmanians are going to pay for the Hydro’s mistakes for years to come.
We already face a 25 per cent price hike for power next year.
Hospitals, schools and roads could benefit immeasurably from $450million.
A whopping $148million ran down the gurgler with Hydro hedging against the Basslink contract — before the project was even given the go-ahead by the RPDC.
The fact the Hydro sought accounting advice about how to keep these shocking figures off its balance sheet is disturbing.
The resignation of a Hydro director last year for late disclosure of an interest only adds to the concerns.
Basslink is a long-term bet on rain.
Questions remain about how a state utility was allowed to wager $2.3billion on the weather _ without thoroughly checking the forecast.
On Tasmanian Times: The Big Dry: The Big Spin, you mean
