Media Release

Peter Gutwein MP
Shadow Treasurer
Shadow Minister for Energy

Sunday 13th June 2010

Will Government Break Up Hydro?

Shadow Treasurer Peter Gutwein said today that he understood that the Labor Green Cabinet was considering a major restructure of the three state owned energy businesses even though no mention was made of this before the recent election.

In December 2009 the Labor Party said in a major statement on energy that:

"Our fundamental policies are working and remain unchanged",

It appears now however that the Labor Green Cabinet is about to make it up as they go along. We simply can't have significant changes made to the energy system in Tasmania without wide consultation and as a kneejerk reaction to some bad publicity for the Treasurer and Energy Minister.

I understand that a number of options are on the table as a result of the conflict between Hydro and Aurora as well as concerns regarding Auroras financial situation including: " Hydro being forced to hand over to Aurora significant generation assets to help strengthen Aurora's balance sheet and introduce increased competition in the wholesale energy market currently dominated by Hydro. " The transfer of Aurora's distribution arm (the poles and wires) to Transend, allowing Transend to manage all of Tasmania's electricity transmission and distribution. " Hydro to become a retailer in direct competition with Aurora in the Tasmanian residential and small business markets. " A restructuring of the debt carried by the three businesses to reflect the asset transfers and also provide more balance sheet flexibility for Aurora by increasing Transend's debt levels.

Mr Gutwein said that the Government must ensure that any restructure doesn't advantage Aurora to the detriment of either Hydro or Transend.

If any of these options are agreed to by the Labor Green Cabinet, a kneejerk reaction to the financial performance of these companies must not be the only driver.

Any options agreed to must be accompanied by a long term strategic plan for energy developed through wide consultation with energy users both large and small and not just the three state owned energy businesses that obviously have clear conflicts of interest regarding any major changes to the structure and direction of energy in this state.

The Labor-Green Government must guarantee that any decisions they make will strengthen our energy security, improve service standards and keep downward pressure on prices as well as ensuring that we can benefit substantially from Tasmania's mainly renewable energy base in an increasingly carbon constrained world.

I suspect sadly that as a long term strategic energy plan was not developed during Labor's last 12 years that once again we will witness the Government being reactive to immediate problems without the benefit of any structured process of consultation, planning or a long term strategic vision.

I also note that the Greens have been calling on Labor to adopt a long-term strategy before making any changes. Can Tasmanians take it that this will mean Nick McKim and Cassy O'Connor will absent themselves from the Cabinet discussions, given the proposals are in contradiction to their own party's policy?