This is the thirteenth post in a series of 18. I will continue to post daily, or thereabouts until all posted. The posts are related to how Hydro Tasmania actually earns money, how the National Electricity Market shapes its fortunes, and why the numbers in its accounts now matter more than at any time in the past two decades. It also seeks to dismantle the myths that have dominated public debate.
This brief post ends a series related to the financial position of Hydro Tasmania this post draws together the underlying profit, balance sheet and cash flow considerations to reveal a more full and detailed description of Hydro Tasmania’s position and risks. I thank John Lawrence for his assistance in preparing this information, his attention to detail and research over many years as we have worked together to better understand one of the most complex areas that impact our state, economically and functionally.
What the Numbers Reveal – Hydro Tasmania’s Financial Position in Full
By this point in the series, the pieces of Hydro’s financial story are on the table. We have looked at the underlying profit – the number that shows how Hydro actually performed. We have reconstructed the balance sheet – the part that reveals what Hydro owns and what it owes. And we have examined the cash‑flow statement – the final test of whether Hydro is generating enough real money to sustain itself. Each of these elements tells part of the story. But it is only when they are read together that the full picture emerges.
The first part of that picture is the collapse in underlying profit. Hydro’s operating result for the parent company fell from a surplus of almost $200 million to a loss of $14.7 million. This was not the result of mismanagement or a single bad decision. It was the arithmetic consequence of less water, lower derived prices, structural Large Generation Certificate (LGC) losses, and higher settlement costs. Even record Inter-Regional Revenues (IRRs) could not offset the fall in generation revenue. The operating engine of the business simply produced far less than it had the year before.
The second part of the picture sits on the balance sheet. Hydro’s assets rose sharply, but almost all of that increase came from revaluations – accounting uplifts that do not improve liquidity or resilience. The liabilities, by contrast, rose because of real obligations: more debt, more payables, a larger onerous LGC provision, and substantial derivative liabilities that reflect future cash outflows. The reconstructed balance sheet shows a business that is more leveraged and more exposed than it was a year earlier, with less room to absorb shocks.
The third part of the picture is the cash flow. Hydro’s operating cash fell by more than $100 million. Capital expenditure remained high. Dividends still had to be paid. And the gap between what Hydro earned and what it spent was filled almost entirely with new borrowing. This is not a sign of strength. It is a sign of a business leaning on its balance sheet to compensate for weakening operating performance.
When these three strands are placed side by side, the pattern is unmistakable. Hydro’s operating performance deteriorated. Its liabilities increased. Its cash flow weakened. And its liquidity was maintained only because it borrowed heavily. This is not a temporary fluctuation. It is a structural shift in Hydro’s financial position.
What makes this more concerning is the widening gap between the numbers and the public narrative. The official story emphasises resilience, opportunity, and long‑term potential. It highlights the Integrated Services Plan (ISP), deep storages, and the promise of future firming revenue. It downplays the loss of IRRs, the structural LGC losses, the rising debt, and the tightening liquidity. And in some cases – as with the recent claim that Tasmania will “benefit from negative Victorian prices” – it repeats myths that are simply incompatible with how the National Electricity Market (NEM) works.
This gap between internal reality and public messaging is not new. It has been growing for years. The Marinus Whole of State Business Case (WoSBC) was released in heavily redacted form, obscuring the assumptions that underpinned the government’s decision. The annual report is technically compliant but structurally opaque, making it difficult for the public to see the pressures now visible in the reconstructed accounts. And the refusal to disclose basic revenue and cost information during scrutiny hearings – information that is not commercially sensitive and is readily inferable from public data – signalled a shift toward increased secrecy at precisely the moment transparency was most needed.
The question that now hangs over the entire energy debate is whether the financial risks revealed in the 2024/25 accounts were known to those who made the WoSBC decision. If they were known, why were they not disclosed? If they were not known, why not? Either answer raises serious concerns about governance.
None of this means Hydro is failing. It remains a vital asset with deep technical capability and a century‑long legacy of service to the state. But the numbers show a business whose financial resilience has weakened, whose risks have increased, and whose future contribution to the State Budget is far less certain than the public narrative suggests.
The next chapters turn to the myths that have distorted public understanding, the governance failures that allowed them to flourish, and the fiscal implications for Tasmania. The numbers speak for themselves. Our task now is to understand what they mean.