Media Release

Peter Gutwein MP
Shadow Minister for Energy

Friday 4th June 2010

Hydro/Aurora Fight Could Cost Tasmanians Dearly

The Minister for Energy needs to act quickly to stop the war between Hydro and Aurora turning into higher power prices for all Tasmanians.

In a remarkable exchange between the two taxpayer-owned businesses, Aurora has blamed Hydro for its business underperforming and Hydro has taken aim at Aurora's senior management claiming they don't understand the energy market or the risks inherent in it. The fight erupted when the Energy Regulator sought submissions regarding its 2010 retail price investigation.

Aurora said in its submission to the Regulator that: "&the cost to generate or procure electricity from Hydro Tasmania has been greater than the regulated allowance resulting in losses and under performance of the business. (Aurora submission, p.25)"

Hydro responded in its submission by saying that: " "significant misunderstandings appear to underlie Aurora's submission..." (Hydro submission, p.2); " "It appears to us that what Aurora is saying here is that they chose a risk management strategy which has lead to their costs being higher than the regulator's determination&this was a commercial choice." (Hydro submission, p.10); and "(Aurora's) characterization of the energy market risks is incorrect". (Hydro submission, p. 5).

So we have Aurora saying that it is losing money and its business is underperforming and pointing the finger at Hydro. Hydro has responded by directly criticizing Aurora's senior managers and saying that any losses are the result of decisions made by Aurora.

What is going on here? It is simply not good enough that the Minister for Energy, Bryan Green, can sit idly by while two massive, taxpayer-owned businesses appear to be locked in a damaging and costly battle which must be taking their focus off their core business of providing energy and services to Tasmanians.

The clear message in all of this is that it appears that Aurora is in deep financial trouble. Even Minister Green has failed to deny that Aurora has asked the Government for $200 million.

What is Bryan Green doing to fix the mess? How much will it cost and when will the problem be fixed?

The Minister, has a clear obligation to step in and sort this out. The longer he delays, the more it could ultimately cost Tasmania to fix the problem.

Sadly, the only thing that we know for sure is that Tasmanians can expect their power prices to jump drastically as a result of the Minister's inaction.