Public Accounts Committee

14 August 2016

Hydro Tasmania has taken the opportunity to address and correct commentary provided in evidence to the Public Accounts Committee (PAC) and in media since the last hearing.

Hydro Tasmania’s Chief Executive Officer, Steve Davy, explained the company’s position in his opening remarks to today’s PAC hearing.

Bryan Green opinion-editorial – Saturday Mercury 13 August, 2016

Mr Green has asserted that Tasmania could have avoided the costs of temporary diesel generation if the Combined Cycle Gas Turbine (CCGT) had been returned to service sooner.

In reality, the CCGT remained available for service. The decision to recall it came at the end of the lowest Spring inflows on record, but before the Basslink cable failed.

The Energy Supply Plan was put in place after the Basslink failure. It included temporary diesel generation, and negotiating load reductions with major customers.

These actions were taken because of the uncertainty about future inflows and when Basslink would return to service.

The delay in returning the CCGT to service was caused by the maintenance regime needed to take it out of dry layup. But that time period did not make a material difference to Hydro Tasmania’s storage position.

Temporary diesel generation would still have been necessary as an ‘insurance policy’ in any case, given the uncertainty about the return to service of Basslink and future inflows.

Tasmanian Gas Pipeline (TGP) evidence

Representatives of TGP have asserted to the Committee that if Hydro Tasmania does not enter into a contract with that business, it will increase prices for Tasmanian customers.

The remarks by TGP are simply designed to disparage Hydro Tasmania and strengthen the private company’s bargaining position in their own interests.

This is exactly the sort of behaviour the Australian Competition and Consumer Commission is seeking to prevent.

It is our responsibility to resist such negotiating tactics in the long-term interests of Tasmania.

We believe the Committee should question the merits of the majority of the assertions made by TGP in evidence.

Rio Tinto Bell Bay evidence

Evidence provided to the PAC, through Ray Mostogl, has suggested that the energy businesses have not been effective in recent years.

We find this assertion odd given that:

• Six years ago we signed a new agreement with Rio Tinto Bell Bay designed to take that business through to 2025;
• In 2012, Rio Tinto Bell Bay sought to renegotiate this deal, claiming it could not operate under the newly negotiated deal;
• We agreed to renegotiate, and when a new deal was finalised, Rio Tinto announced it was now able to confidently operate into the future;
• In 2015 we assisted Rio Tinto Bell Bay again in its need to be exempt from the renewable energy target, and assisted with an increased load transaction which they said would see their future secure.

Despite all the support from state owned energy businesses, aluminium businesses in Australia struggle. That is caused by international markets, not about a lack of understanding of, or support for, these businesses.

Mr Mostogl has also told the Committee that his business heard about the proposed sale of the combined cycle gas turbine in the newspaper. However, Minister Groom announced at GBE hearings in December 2014 that dismantling and sale would be explored. Over the next six months, during contract negotiations, Rio Tinto Bell Bay had ample opportunity to raise concerns about this.

At midnight last night, Hydro Tasmania’s total energy in storage was 37.3 per cent. Our major storages have also recovered well because of record rainfall in the past three months. Great Lake is at 28.1 per cent and Lake Gordon is at 21.8 per cent.


Released for Hydro Tasmania by Rowan Dix, (03) 62305330 / 0409 722359 /


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