Drought has been a risk for Hydro Tasmania throughout its history and our response has varied from building more dams and extending the hydropower system, to building a thermal generation site, to supporting the undersea cable of the Basslink project. Now Hydro Tasmania is utilising the capability of these assets to respond to the need for long-term prudent water management to remain sustainable as a business
and as specified in its Ministerial Charter.

The most significant operating factor for Hydro Tasmania in 2006/07 was managing the impact of drought conditions. Pressure on water storages was unprecedented and created risk for operations, ecosystems and recreational use of our facilities.
The long-term management of water is a prime driver in planning and operating the business.

This Annual Report contains information on our response and activities to managing the low water levels during the reporting period based on established practice and the changes that will carry us into the future and contribute to restoring water levels over time.

Basslink, in its first full year of operation, has proved its worth in drought mitigation by providing the facility to import energy.
In 2006/07, generation from gas provided a further fuel alternative to maintain power supply and to manage water levels. Gas is planned to be used over the next two years to help improve storage levels.

A monitoring program was implemented at key lakes in the system to help manage the social and environmental risks of operating at low levels.

In its competitive environment, Hydro Tasmania aims to maximise the potential from the natural resources under its stewardship and will focus on capturing the long-term value of the renewable energy sources. A position was created early in 2007 to develop a system enhancement strategy. Reducing greenhouse gas emissions is part of this enhancement.

Maximising the potential of water means our engineering assets must be able to respond when needed. The upgrade and modernisation strategy for Hydro Tasmania’s generation assets contributes to this aim. The full benefit of the Trevallyn Power Station upgrade was utilised in 2006/07 with approximately 15 MW of additional capacity available. The Liawenee Canal upgrade was completed and will increase the water transferred into Great Lake and generation at Poatina Power Station. Upgrade work on the first machine at Poatina Power Station has started.
The previous study into climate change in 2004 has prompted Hydro Tasmania to review its 83 years of data for inflow sequence to help understand the long-term trends. This work, project RaIN, has indicated that a change in inflows in the last 31 years reflects the potential inflows to the Hydro system in the future.

Based on this data, operating rules were reviewed in 2006/07 and expectations for future inflow patterns have been adjusted to guide optimum operation of the system now and into the future, according to the prevailing conditions.

Hydro Tasmania, together with other climate change stakeholders, is pursuing a better understanding of climate change impacts on its resources and consequences for its business operations with a proposal for more modelling on climate change scenarios to be conducted by Antarctic Climate and Ecosystems CRC.