Hydro Tasmania will rebound strongly from a challenging 2015/16 by rebuilding storages, restoring profitability and reducing debt.

The company’s underlying result for the 2015/16 financial year was a loss of $65.4 million before tax, fair value adjustment and revaluations. That result is about $100m below budget.

The result is somewhat better than the estimated loss of $90m advised to the Public Accounts Committee on 20 June 2016. This is due to:

• A strong revenue result in the second half of June, due to good rainfall, increased generation from storages on spill, and related exports into the Victorian spot market where high spot prices were realised; and
• Additional revenues from gas market sales into higher prices, and additional revenue from the sale of Environmental Energy Products.

The result was mostly driven by the energy supply challenge, brought on by record low inflows in spring 2015 and the 176-day Basslink outage which necessitated supplementary generation from gas and diesel.

Hydro Tasmania had previously estimated the impact of the low inflows, along with the Basslink outage, was between $140 million and $180 million, including the offsetting reduction in Basslink costs. Due to the better result in 2015/16, and good inflows since, it is now expected that the impact will be at the lower end of that range. Most of that impact occurred in the 2015/16 financial year, with some carried over to the current year.

Hydro Tasmania is forecast to break even or return a small underlying profit in 2016/17, while also reducing net debt by about $50 million.

The Chairman of Hydro Tasmania, Grant Every-Burns, said the company remains financially strong.

“The 2015/16 year was very challenging by any measure,” Mr Every-Burns said.

“The cost of the Energy Supply Plan was substantial, but certainly justified for the purpose of protecting Tasmania’s energy supply and economy.

“By the end of this financial year, Hydro Tasmania expects to break even or post a small profit, and reduce net debt from $827m to $772m.
“There will be no complacency. We have weathered an unprecedented and extremely rare challenge and are heading in the right direction,” he said.

Hydro Tasmania’s accounting loss (after tax) was $205m, due to the negative revaluation of its electricity contracts. However, the valuation of its generation assets increased because of a significant rise in the price of electricity and Large-Scale Generation Certificates in the National Electricity Market. These two factors largely balanced out, producing a total comprehensive loss of $3.6m.

The State Budget projects no dividends from Hydro Tasmania until financial year 2019–20. That does not mean Hydro Tasmania will be unprofitable in that period. The company will work closely with the Tasmanian Government to increase Hydro Tasmania’s financial strength for the benefit of all Tasmanians.

Hydro Tasmania reports its underlying result year on year, allowing comparison of a consistent set of figures (see the table below).

Hydro Tasmania’s 2015-16 annual report was tabled in State Parliament today and is available here.

Ends.

Released for Hydro Tasmania by Rowan Dix, (03) 62305330 / 0409 722359 / media@hydro.com.au.