Volume Four 2010 focus on Electricity

The Auditor General, Mr Peter Achterstraat, today released his Volume Four Report to Parliament for 2010. The report includes comments on financial audits of government agencies in the electricity sector.

“It is pleasing that the audits of the seven NSW electricity corporations’ financial reports for the year ended 30 June 2010 each resulted in an unqualified Independent Auditor’s Report”, Mr Achterstraat said.

“I did note significant uncertainty that may affect the value of power station assets due to the unknown impacts of any future carbon pollution reduction scheme and the Government’s proposed electricity industry reforms”, he added.

Increased profits and distributions to Government

The combined profit after tax of the electricity agencies was $1.2 billion compared to $847 million in 2008-09. Pre-tax profits of the distributors increased substantially from $661 million in 2008-09 to $965 million. Pre-tax profits from generators increased from $307 million to $465 million.

Electricity entities’ distributions to the Government were $1.4 billion, up $0.2 billion from last year.

The average regulated retail price for electricity is expected to increase by between 20 and 42 per cent by 2012-13—excluding the impact of any future carbon reduction scheme. The highest wholesale spot price for the twelve months ended 30 June 2010 was $9,283.95 $/MWh on 20 November 2009 at 1:00 pm, with the lowest price of -$264.31 $/MWh on 11 February 2010 at 3:30 pm.

Electricity demand increases

“Projected electricity demand in New South Wales is currently expected to exceed supply by 2016-17", Mr Achterstraat said. “The Government has advised that it has planned projects to meet this demand”, he added.

Plans to secure efficiently priced coal supplies for electricity generators may be delayed due to the Government’s preferred tenderer withdrawing from the tender process to build and operate a new coal mine at Cobbora.

Privatising the NSW electricity industry has been ongoing for twelve years and continues to present challenges to Government

The Government faces a number of challenges with its restructure of the NSW electricity industry – the more significant of these is uncertainty with any future carbon pollution reduction scheme and the complexity of the Genetrader model. The sale is expected to be finalised in early 2011.

Renewable energy targets remain a challenge

Currently six per cent of NSW electricity comes from renewables with a 2020 target of 20 per cent. Hydro continues to make up nearly ninety per cent of NSW renewables. The number of customers purchasing green energy from electricity suppliers has decreased by 56,437 or 23 per cent. However, at 30 June 2010, 25,717 customers produced green energy through the solar tariff scheme.

Further information

Barry Underwood Executive Officer on 9275 7220 or 0403 073 664