Media Release

Peter Gutwein MP
Shadow Minister for Energy

Sunday 13th December 2009

Is Hydro going to be an energy retailer in Tasmania?

The Minister for Energy David Llewellyn must explain if he intends to let warring State owned electricity entities Hydro and Aurora loose in Tasmania to compete against each other for retail electricity customers.

Currently Hydro is the major generator in Tasmania and holds a retail licence in Victoria where it sells electricity into the retail market. Aurora is the major Tasmanian energy retailer in Tasmania and also sells electricity to mainland customers. Aurora also became a generator recently in Tasmania after it recently commissioned the Aurora Energy Tamar Valley generator at Georgetown.

At Government Business estimates earlier this month Mr Llewellyn confirmed that a review by PricewaterhouseCoopers had been underway for the last 12 months into the structure of the energy market in Tasmania, and that one of the options being considered was allowing Hydro to establish itself as a retailer in Tasmania.

As Hydro and Aurora have been at each other’s throats in recent times with Aurora confirming that Hydro had cost it $8.5M in gross profit last year the Minister needs to explain exactly what his intentions are.

Furthermore, as the Government’s energy reform strategy is in now in tatters as they will not be able to deliver competition to the remaining 260,000 mums and dads and small business customers next year as originally planned, the Government must not allow this policy failure to drive its decision making processes regarding the introduction of further competition into the market place.

I am very concerned that the closed review that the Minister has put in place fails to engage widely enough with energy stakeholders to ensure that all issues have been considered before allowing Hydro to have a retail electricity licence in Tasmania.

As the only three participants in the review are Hydro, Aurora and Transend the other state owned electricity company, it can hardly be said that the review has a wide range of participants or that it’s representative of customer markets in Tasmania.

Asking Aurora if it wants further competition against its retail arm is a no brainer and Hydro obviously are intent on taking it up to Aurora if given the chance so neither is ideally placed to provide an objective view as to the best way to move forward.

Both are hopelessly conflicted and very surprisingly as competition in the energy market in Tasmania is obviously one of the key issues being looked at the Minister must explain why no customer representatives were included in the review process.

After all the major beneficiaries of a truly competitive market should be the customers so it says a lot about the way this Government goes about its business that it never included any customers as a part of its review.