Hydro deep in the red
THE State Government will examine Hydro Tasmania’s debt level after it posted a $248 million loss last financial year, just days after talking up its operating profit.
Hydro was stung by taking on the Aurora Energy Tamar Valley power station, the acquisition of which wiped $335 million off its books in asset writedowns.
Hydro has debt levels of $866 million after the gas-powered station was transferred at a cost of $205 million from Aurora Energy to Hydro under government energy reforms.
The loss is distinct from last week’s before tax operating profit of $238 million, which was mainly a result of record sales of carbon-free electricity across Basslink.
Chairman David Crean said the loss was largely as a result of taking on AETV and its associated debt as well as the revaluation of hydro generation assets.
“The Government has committed to reviewing our capital structure in 2013-14 to assess the sustainability of Hydro Tasmania’s balance sheet following the transfer of debt from AETV,” Dr Crean said.
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The likely abolition of the carbon tax exacerbated the writedowns of hydro power stations.
“In recent years the value of generation assets increased as a result of the introduction of a price on carbon,” he said.
However, as a result of a range of factors, including a reduction in forecast energy and carbon prices, the value of generation assets was revised downward in 2013.
Liberal Energy spokesman Matthew Groom said it was a $330 million Government stuff-up and that the Government had tried to cover it up.
Deputy Premier Bryan Green said the revaluation of the Tamar Valley power station was a necessary adjustment under accounting standards to reflect the way it would be operated in future.
He said the loss did not affect Hydro Tasmania’s cash position and that the station was an important asset.
The Aurora Energy Tamar Valley power station has barely operated since early July, generating just 3.34 gigawatt hours compared with an average of 34 GWh a week under Aurora.
But Hydro chief executive Steve Davy said operation would resume when the current high rainfall inflows to hydro storages and rivers stopped.
So what’s the real story here? Aurora makes a before tax profit, yet Hydro makes a loss. This clearly means that Hydro isn’t a competitive player! Just goes to show that even if the government does eventually open up the retail market for the general consumer there’s no guarantee that the retail costs will be lower if the local power generation company’s can’t even balance the books!
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