The following was published in The Examiner five years ago in my column The Business Edge. At the time, Aurora would have fetched around $1.5 billion. Now it is worthless, and likely to be absorbed back into Hydro Tas.
So if some of us are yet to realise that the Hydro bill actually comes on an Aurora Energy letterhead, imagine the potential confusion when the State’s retail electricity network is opened to full competition in less than four years.
When that happens, the issuer of the account could be Aurora, or it could be Alinta, CitiPower, Powercor or any one of dozens of companies keen to pick up a slice of the State’s retail energy market.
If conventional wisdom holds, the extra competition will be good for consumers.
After all, telecommunications costs have tumbled since Telstra’s monopoly was broken up, with the only real drawback being the need to repeatedly answer the phone around dinner time to discuss new and improved offers from promoters of rival phone services.
But new entrants to the energy market will place enormous pressure on Aurora, the State-owned retailer, which is already forecasting a drop in profits as a result of the coming competitive environment.
Aurora will almost certainly be worth less as an entity in five years than it is now, a point unlikely to be lost on the State Government, which is already looking around for assets to sell to help prop up the State’s finances.
The electricity retailer will be at the top of the Government’s “what can we offload?” list, and selling it sooner rather than later would make a lot of sense.
The Government could wipe out all of Aurora’s debt, give Hydro Tasmania its controversial $300 million capital injection and even put a healthy down- payment on a new hospital for the State’s South. All, in theory at least, without disadvantaging Tasmania’s electricity consumers, who are Aurora’s ultimate owners.
Best of all from the Government’s perspective, selling Aurora wouldn’t compromise its 1998 election commitment that the Hydro wouldn’t be sold by a Labor Government.
The biggest obstacle the Government faces is convincing a sceptical public that the sale of State-owned assets is in the community’s best interests. Opening an honest and transparent debate about the benefits of selling Aurora would be a good place to start.
