A strong focus on cost savings and business efficiency has enabled Hydro Tasmania to deliver a financial result significantly better than forecast a year ago.

Hydro Tasmania achieved a result of $62.3 million (before fair value adjustment and revaluations) in 2014–15.

Announcing the Corporation’s annual results, Chairman Grant Every-Burns said Hydro Tasmania had gone to great lengths to re-set the business for the future in which it must operate.

“Along with the rest of the energy industry, Hydro Tasmania is dealing with a market affected by a range of domestic measures designed to reduce energy sector emissions and a volatile global trading environment for the sector’s largest customers,” said Mr Every-Burns.

“Demand for energy has flattened across the National Electricity Market, there has been prolonged uncertainty and change in national renewable energy and climate change policy, and new technologies are starting to change the way consumers choose to source energy.

“Our response to these issues has been to simplify our business, focusing on delivering to customers in Tasmania and elsewhere, which has in turn required a critical examination of our portfolio of activities and of the way we have traditionally operated.”

During 2014, Hydro Tasmania undertook a major restructure of its operations. This restructure positions the business better to anticipate and respond to emerging market trends, but resulted in job losses. The Hydro Tasmania workforce was reduced by nine per cent.

This year’s result is a strong one, given the subdued operating environment and was well above expectations. It is expected to result in cash returns to the Tasmanian Government in 2015–16 of $42 million, including a dividend of $25 million.

However, Chief Executive Officer Steve Davy said the following year will be much tougher.

“The business benefited in 2014–15 from revenue from renewable energy certificates linked to higher than normal generation during the latter part of 2014. This will not be repeated in 2015–16,” Mr Davy said.

“Compared with 2013–14, we received less revenue in 2014–15. Wholesale electricity prices were significantly lower without the carbon price, and hydro generation volumes were significantly lower than for 2013–14. This was due partly to a return to more usual generation levels following the end of the carbon price.”

Hydro Tasmania’s retail business Momentum Energy reported another successful year, with a profit before tax of $37 million.

“Momentum Energy is creating value by growing its customer base in states such as Victoria and New South Wales while returning profits back to Tasmania,” Mr Davy said.

“This strategy diversifies our revenue opportunities, builds on Tasmania’s competitive advantage as the nation’s renewable energy powerhouse and manages our risks in the highly competitive National Electricity Market (NEM).”

A strong end to the financial year saw Entura deliver a net contribution to Hydro Tasmania’s underlying result above the original budget. This was a welcome turnaround from last year’s loss and is a credit to the work of the Entura management team and all Entura employees.

Hydro Tasmania continues to work with the Tasmanian Government on managing the challenges face by the business and taking advantage of opportunities arising from government’s energy strategy. Specifically, the business is working with government on examining options to increase energy production from existing hydropower assets, and looking at the conditions under which a second electricity interconnector across Bass Strait would be viable.

A highlight of 2014 was the celebration of the centenary of state-owned hydropower development in Tasmania.

“This milestone provided a series of opportunities to engage with the Tasmanian community and encourage people to share their ‘Hydro’ stories with us and the rest of the community,” said Mr Davy.

“Tasmania’s renewable energy will be a key advantage for the State and to Australia as the world moves towards lower-emissions economies. Hydro Tasmania will be well placed to benefit from this transition and to capitalise on the renewable energy opportunities that it will present.

“Hydro Tasmania is an important contributor to Tasmania and a key part of a sustainable future for the State. Our strategy will build on our competitive advantage and ensure a positive and long-term future.”

Hydro Tasmania’s annual report was tabled in State Parliament today and isavailable here.
 

Ends.

Released by Samantha Meyer, 03 6230 5746

Hydro Tasmania results: FY14/15 and FY13/14 comparison

* Reflects the performance of the business within the year, before accounting adjustments are made

^ Excluding debt associated with the Tamar Valley Power Station, this amounted to a core debt of $646 million in 13/14.