Hydro Tasmania is in a sound financial position.
 
Any inference that we face a cash crisis, as claimed in today’s Sunday Tasmanian, is nonsense.
 
The business will return a strong profit this financial year, as it has for each of the last five financial years. Our projections indicate this trend will continue.
 
Hydro Tasmania is not considering any sale of hydro assets.
 
Hydro Tasmania’s General Manager Corporate Lance Balcombe said today that, under its Ministerial Charter, Hydro Tasmania is required to review its capital structure regularly and advise Government of the outcome.
 
“We announced in our last Annual Report that we had undertaken a detailed review of our capital structure,” Mr Balcombe said.
 
“So what is occurring now is discussion with Government on our capital structure and an equity injection to reduce debt and improve cash flow.
 
“It is a matter of public record and was even discussed in the Government Business Enterprise hearings last year when it was recognized that Hydro Tasmania’s debt level was too high as a result of the disaggregation of the old HEC in 1998.”
 
Mr Balcombe said Hydro Tasmania had previously noted in its 2004/2005 Annual Report that the review found the existing capital structure was adequate for us operating in Tasmania prior to National Electricity Market entry, that is, as a monopoly generator with relatively steady, regulated returns.
 
“However, it also concluded that a stronger balance sheet would provide trading advantages and greater resilience in the National Electricity Market in which we now operate,” he said.
 
“This is the issue at hand. Claims of a cash crisis are ridiculous and wrong.”

Mr Balcombe said Hydro Tasmania would deliver a strong profit result this financial year despite the pressures of low water storages and one-off contingency measures such as purchasing the gas turbines that are being installed at Bell Bay.
 
“There have been significant demands on Hydro Tasmania’s cash flow,” Mr Balcombe said.
 
“After eight years of below average rainfall, water storages are around 30 per cent so to meet Tasmania’s electricity demand, we have expended heavily on gas, and have also spent $50 million on supplementary gas generation as a contingency measure.
 
“The costs of these measures had an impact on our cash position but have been absorbed with no impact on customers,” Mr Balcombe said.
 
“There is also a major program of refurbishment of ageing assets to make us as competitive as possible in the National Market.
 
“Despite these pressures, Hydro Tasmania will return a strong profit this financial year and into the future and is well-placed to trade electricity across Basslink into the national market.”
 

Released by Helen Brain, 03 6230 5746.