Hydro Tasmania considers it a “reasonable chance” it will need to fire up the costly Tamar Valley power station to meet the state’s energy needs, as record low rainfalls wipe out the business’s forecast profits.
Hydro Tasmania has not run the gas-fired plant in the state’s north since it was forced to acquire it from Aurora Energy in July 2013.
As water storage levels drop to just 26 per cent, severely restricting Hydro’s ability to generate power, Hydro may have to turn to the alternative power source.
Hydro Tasmania chief executive Stephen Davy said almost 40 per cent of the state’s electricity needs were imported from coal-fired plants in Victoria in November.
“There would be a point at which the price of imports would mean that it would be better to run the gas plant,” Mr Davy said.
“We consider it to be a reasonable chance because we’re getting prepared for that at the moment.”
Even without bearing the expense of running the Tamar Valley power station, lost revenue from not being able to generate and sell power will hurt this year’s financial results.
Mr Davy would not put a figure on how much the business had lost so far.
The profit that we were forecasting to make for this year is not looking likely.
“The profit that we were forecasting to make for this year is not looking likely,” he said.
He reassured consumers that Hydro’s financial woes and the cost of imported power would not impact on household power prices, which are set by the economic regulator.
However, the State Government is not as lucky and will likely have to forego millions in forecast dividends from the once hugely profitable business.
The Government will still reap a $ 25 million dividend from Hydro this financial year because the figure is calculated on the result for the previous 12 months, but the forecast $ 19 million for next year now appears unlikely.
Tamar Valley power plant sale rethink urged
Earlier this year, the Government approved a partial sale of the gas-fired power plant.
State Opposition Leader Bryan Green said the dry conditions showed the state could not afford to lose the alternative power source.
Mr Green suggested Energy Minister Matthew Groom should value the asset as a potential “saviour of our state” and urged Hydro to fire it up instead of importing so much.
“We have a combined cycle unit that can generate about 210 megawatts of power sitting idle that could potentially produce that energy cheaper than what we’re importing it for,” he said.
Greens leader Cassy O’Connor said the plant would provide a short-term solution only.
“We need long-term thinking here, we need investment in energy efficiency, we need to create incentives for people to have their own, solar and batteries, and we need to have the right policies in place so private investors are investing in renewable energy in Tasmania,” Ms O’Connor said.
Topics: hydro-energy, government-and-politics, states-and-territories, tas