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Category: Electricity Energy and Utilities / Hydro Energy / State Parliament

Minister at odds with Hydro over need for Tamar Valley Power Station

Monday, 21 Nov 2016 07:25:23 | Georgie Burgess

The Government believes the Tamar Valley Power Station is needed to "keep the lights on" in a crisis. (ABC)

Hydro Tasmania and the state's Energy Minister are at odds over whether the Tamar Valley Power Station is needed to keep the lights on in the event of another energy crisis.

An inquiry has resumed into the circumstances surrounding Tasmania's energy crisis which was caused by the failure of the Basslink power cable that coincided with record lows in Hydro Tasmania dams.

The state-owned power company imported and installed diesel generators around Tasmania to boost energy generation capacity during the crisis, at a cost of $64 million.

As part of the inquiry, Hydro's financial position is being scrutinised by Parliament's Public Accounts Committee.

Chairman Grant Every-Burns told the inquiry Hydro was committed to running the power station in January, but did not need it for energy security.

Hydro had planned to sell the main turbine at the power station, but it was taken off the market and used during the extended outage of Basslink.

Using the gas-fired station during the energy crisis cost Hydro $47 million.

"The circumstances in which it was used have been and gone," he said.

"The machine is now sitting there fully available, right now I'm saying to you — hand on heart — we don't need it for energy security."

However, Energy Minister Matthew Groom maintained it remained important to energy supply and it should be retained.

"What's important is that we have the station to support energy security and also that we're making sure Hydro Tasmania is maintaining its focus on energy security and that is what its doing," he said.

Hydro 'sailing close to the wind'

Last year, Hydro Tasmania was given a letter of comfort from the Government to provide assurances to lenders that it could take on debts of just over $1 billion.

Hydro told the inquiry it expected to need the debt letter for the next four years.

It currently holds debt of $800 million, and is moving to reduce it by $50 million over the next financial year.

Opposition Leader Bryan Green said it was concerning.

"A letter of comfort means they are finding it difficult to maintain their solvency," Mr Green said.

"They say they're in a good position and won't need the letter of comfort in the future but essentially right at the moment it means they're sailing very close to the wind."

The inquiry heard that the largest turbine at the power station was worth $16 million, despite Hydro taking on $100 million of debt when it took it over from Aurora.

Committee chairman Ivan Dean asked how much Hydro Tasmania had claimed from Basslink in legal proceedings, but Mr Every-Burns said that was confidential.

"Most of the impact occurred in the last financial year with some carried over to the current year."

Energy crisis cost less than first thought

The inquiry heard the energy crisis had cost Hydro about $140 million, and did not reach $180 million as predicted.

"Owing to the better result for 2015–16 and good inflows since, we now expect the overall cost to be at the lower end of that range," the chairman said.

"Most of the impact occurred in the last financial year with some carried over to the current year."

He said water storages were currently sitting at 46 per cent, 20 per cent more than at the same time last year.

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