Hydro’s grand plans are selling Tasmanians short

HYDRO’S GRAND PLANS ARE SELLING TASMANIANS SHORT

The Tasmanian Greens today said that Hydro Tasmania’s retail arm, Momentum, is offering mainland consumers carbon-price free electricity, which risks undercutting the carbon-price dividend flowing back to the State to benefit Tasmanians.

Greens Energy spokesperson Kim Booth MP said Hydro, instead of concentrating on its core business of delivering energy to consumers, was fixed on empire building.

“Hydro’s off-shoots, Momentum and Entura, are more about vanity projects which exposes the State and its consumers to risk.”

“The photo of a Melbourne billboard by Momentum tells this story in full-colour, a story of contempt for the Tasmanian public which owns Hydro.”

“Hydro’s retail arm, Momentum, is offering carbon-price free electricity to mainlanders, but not its Tasmanian customers, who are losing out. To add insult to injury, it’s in full colour, twenty feet high at Melbourne airport.”

“All Tasmanians will benefit from the carbon price, either by sustainable power prices washing across the whole economy, or by improved government services as a result of retained earnings by Hydro. But not if Hydro gives it away first.”

“Tasmania has a carbon-price advantage thanks to its 80% carbon-pollution-free power. This advantage should be retained by the State, instead of given away to Victorian business to compete with us.”

“The big danger is that Hydro will use the carbon-price dividend for its own risky empire building, which places the public purse at risk.”

“Hydro is treating Tasmanians as mugs and Energy Minister Bryan Green MP should step in and take control.”

“Under this Minister’s watch, Hydro is turning into a rogue agency that is effectively telling Tasmanians to move to the mainland for Hydro to give them cheaper power.”

“As I made clear in Budget Estimates, Hydro’s vain empire building escapades are costing the state dear and its consumers here in Tasmania who are paying the cost.”

“Hydro should concentrate on creating a sustainable energy supply for Tasmanians, instead of propping up the mainland,” said Mr Booth.

Hansard extract: Budget Estimates hearings, Monday 28 May 2012 (here)
Output group 2: Energy advisory and regulatory services (here)

Mr BOOTH – I am not sure that the brand is going to be made up by the loss of small business in competitive capacity by unfair pricing. The electricity expert panel pointed out in the final report that the government as a self-stated risk averse shareholder should reconsider its support for diversification activities that are simply empire-building or value-creating in their own right, with relatively high levels of attendant risk. They list as an example the pursuit of retail agreement opportunities on mainland Australia through Momentum.

If you look at 2010, Hydro Tasmania’s net cash was $178 million. From this Hydro Tasmania funded a $95 million capital investment program and completed the Momentum acquisition of $35 million, which was a total of $52 million, which to date has returned a cumulative loss of $15.1 million during its start-up phase. You have a situation where there is a government business enterprise that is embarking on what the panel describes as risky commercial activity, exposing the enterprise to considerable risk. They are giving away the carbon price to mainland small business, which Tasmanian small businesses can’t access. Isn’t it time to reconsider, in line with the panel’s findings, whether Hydro should be ring-fenced back to its core functions of providing energy generation within Tasmania rather than risking itself with these adventures, identified as such by the panel? It is a pattern of these government businesses enterprises tending to turn themselves into rogue agencies where they suddenly start setting the policy settings. They start doing things, like with the carbon price thing where you are now in front of us, embarrassed because you have a rogue agency that is giving away the carbon price to mainland small businesses to compete with us. Isn’t it time that you had a good look at these outside ventures?

Mr GREEN – Yes, and the panel’s work has been appreciated in that regard. We have analysed that carefully and working with treasury and looking at a solution for Tasmania overall, we believe, given the vertical integrated nature of Hydro Tasmania now with its retailing opportunities on the mainland, and the fact that we have announced significant reform that involves Aurora, and some of the employees and systems that we have within Aurora, that by maintaining Momentum as part of that strategy overall is a smart thing to do.

We know they are living in a commercial world and there is risk associated with it but the forecast for profit and the return to larger profits in the future is good and the prospects for Momentum , on the advice that I have received, are good. As part of the mix overall, we think it is an appropriate thing to do.

Mr BOOTH – The total export capacity of Basslink, effectively, could be on-sold by Hydro Tasmania without any carbon value in it – that’s quite significant.

Mr GREEN – You are making lots of assumptions.

Mr BOOTH – That’s what Momentum are currently advertising, that’s their proposition, and to buy through Momentum you get carbon free power, which no-one else in Australia is able to get access to.