So far the election campaign has seen a few high vizzes making fewer mostly forgettable promises, but as yet no attempt to tackle the big issues.

One of the crucial issues going forward is raising more of our own source revenue. Distributions from government businesses is an important component.

Income from government businesses suffered a marked reduction in the latest yet to be passed budget with $154 million or 36 per cent being removed from last year’s forward estimates from future income expected from Hydro Tasmania. That’s a significant loss of revenue for a small state government.

Normally at Budget Estimates hearing the government of the day’s Plan A is to fob off questions about government businesses using the dodgy pretext they need to be asked at GBE Estimates hearings in six months’ time, but given the Budget contained outlays relating to Marinus and a significant drop in income from Hydro it would have been sufficient to get a few questions on the table.

Alas, Parliament has been prorogued which also meant the important Joint Committee into Energy Matters, which I chaired and was almost ready to report, was abandoned leaving the public in ignorance about what is happening in the electricity space.

Lower distributions from Hydro obviously means profits are expected to be lower. The timing is unfortunate because it’s occurring at a time when Marinus is being considered and Hydro Tasmania has been pencilled in to become the Battery of the Nation.

The Budget papers offer some future hope, for in the last year of the Forward Estimates 28/29 robust returns from Hydro again fill government coffers. The footnote refers to a restoration of hydro storages following the current dry conditions, and presumably a return to average rainfall. The tentative search for a path to surplus depends on average rainfall. My goodness we’re in trouble.

Just a little history about our hydro system. When the first cable Basslink (BL) was on the drawing board 25 years ago our hydro system was considered to be a 10,000 GWh system. This is the electricity which can be generated by average rainfall. It was based on extensive historical patterns. At the time many considered the figure too high a figure to be used to model the benefits of BL. Rainfall patterns were gradually declining. Those advocating caution were correct. The system is now considered to be a 9,000 GWh system.

Inflows in the 23/24 year were only about 6,200 GWh and in 24/25 not quite as bad but certainly less than 7,000 GWh, well under average. The implications for these inflow patterns on modelling a 9,000 GWh Battery of Nation system with a Marinus link have yet to be discussed publicly.

From a production viewpoint, hydro electricity in the 23/24 year of 7,467 GWh was the lowest hydro production since the millennium drought year of 2008/09.

This year 24/25 production is much lower again, likely to be at least 1,000 GWh less with figures from Office of the Tasmania Economic Regulator (OTTER) showing hydro production for the first 47 weeks at only 5,622 GWh.

These are massive changes with far reaching effects.

Now for a quick snapshot of what we consume.

Annual Tasmanian consumption is around 11,000 GWh (not including rooftop solar). This has shown little change in 25 years. In the 2000 year there was no wind, no thermal or gas, and no BL cable hence the 10,000 GWh produced from hydro was all consumed locally.

Current consumption comes from hydro, from wind (around 1,800 GWh) and from BL imports. Net imports from BL were around 2,000 GWh in 23/24 and will be the same for 24/25. BL has been handling around 3,000 GWh pa (imports plus exports). The safe maximum per year for BL is probably around 3,500 GWh.

Over most of the past 25 years changes in consumption have been negligible. However, a notable change has occurred in this year 24/25. Consumption has fallen. In the 21 weeks since 1st Jan 2025 consumption is down almost 5 per cent compared to the same period last year and down 8 per cent compared to two years ago. This is no doubt due at least in part to the difficulties at Temco, Bell Bay but we don’t know for sure. Nothing is ever said. A cone of silence hangs over us.

To come back to my starting point which is the impact of distributions from Hydro on the government’s fiscal position. What exactly will happen to Hydro’s profits with Marinus and Battery of the Nation? What are the effects on a cash strapped government desperately needing more revenue? How will it benefit? It’s not just whether there will be consumer benefits, but what will the returns to government be?

There have been massive variations from norms in the last 2 years… consumption, inflows and hydro production. The effect of changing demand from major industrials is starting to show. Are these temporary changes? Have the models for Battery of Nation and Marinus been based on data patterns that needs to be re-examined.

The data used to justify the building of BL 25 years ago suggested Hydro would benefit mainly by getting higher prices in mainland markets. Whilst we produced almost enough for our needs, there was money to be made by exporting at high prices and buying back when prices were lower.

It didn’t work out that way. BL has been a net importer in most years, increasingly so recently. Whilst much of this import has been at low and/or negative prices, this has been necessary to save water for Hydro generation as well as to meet local demand.

At least BL has been available to import electricity to meet the deficit in local production.

Ironically solving a shortfall problem which wasn’t supposed to exist according to the models used to justify BL.

Is Battery of the Nation and Marinus simply an updated version of the 2000 Basslink dream, based on hope rather than reality? With costs at least five times the cost of the Mac Point project it’s not something we should rush through in the caretaker period of government.