In the past 12 months, Hydro Tasmania experienced one of its worst years on record in terms of poor inflows and declining storage levels, which fell below 20 per cent full for the first time since 1967. This has been a year which has challenged the business on many fronts but two fundamental issues have been acutely highlighted by the poor rainfall.
Firstly, as rainfall is the Corporation’s energy revenue stream, continued poor rainfall significantly impacts on cash flow. Secondly, Basslink provides enormous flexibility to Hydro Tasmania and has demonstrated its capacity to allow the business to “keep the lights on” in severe drought conditions.
Because of the continued low rainfall, Hydro Tasmania’s cash flow as measured after receipts and payments to suppliers and employees was $87.1 million down on the previous year at $134.5 million. Had the business not utilised its storages to assist in absorbing the impact of the low inflows the cash outcome would have been much worse. In order to accommodate our reduced cash position and provide for other expenditure, net debt increased from $1.061 billion to $1.141 billion.
In times of below average rainfall it is important to maintain a balance between adequate cash flow and sustainable storage levels. Achieving this balance is a constant and high priority of the business, which is committed to creating a sustainable future. However, it is fair to say that the continued low inflows have presented the biggest cash challenge in many decades.
Hydro Tasmania’s profit for the financial year was $79.4 million after tax, an increase on the previous year’s result. The paradoxical situation of cash falling and profit rising is a result of new Australian accounting standards adopted by Hydro Tasmania two years ago.
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