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Government must act

08, May 2011

by Jennifer Marohasy

February 16, 2011

Questions over Snowy Hydro water management


It is the ultimate in hypocrisy for the Commonwealth government to be insisting farmers give back water under a new planning scheme to save the environment, while continuing to pocket millions from water wasted by Snowy Hydro for derivative trading on the electricity market.


Last night on ABC Television’s 7.30 Report, journalist Bronwyn Herbert explained how water was released from Eucumbene Dam by Snowy Hydro for electricity generation at the height of flooding in the Murrumbidgee late last year. At the time Eucumbene Dam was at less than 30 percent capacity while the lower storages were spilling. In releasing the water for non-essential electricity generation, Snowy Hydro not only contributed to the flooding, but was wasting water, water that could have been stored for the next drought. Lake Eucumbene is the central storage for the entire Snowy scheme with the capacity to hold the equivalent of nine Sydney Harbours of water.

Since June 2001 when Snowy Hydro Ltd was incorporated, the corporation’s priority has been revenue generation for its shareholders through electricity generation. The shareholders are the Commonwealth, Victorian and New South Wales governments.  

During the recent drought years Snowy Hydro waters contributed to about 60 percent of inflows to the Murrumbidgee and 30 percent of inflows to the Murray River. But then and now, there is no imperative for the management of these waters to complement or accord with water allocations within the Murray Darling Basin.

Given Snowy Hydro’s shareholders are the government, it would seem sensible that these shareholders apply some pressure to the corporation and at least encourage the Managing Director, Terry Charlton, to operate the electricity generating business responsibly.

Instead, the NSW government has actually exacerbated the problem by including in Snowy Hydro’s licence conditions a requirement that additional waters be released as environmental flow equivalents once storages reach a critical level. The plan was developed during drought and perhaps on the advice of climate modellers who believed the system would never flood again. So in effect, the NSW government has been forcing Snowy Hydro to continue to release water from Lake Eucumbene despite the Blowering and Hume Dams already spilling into already saturated catchments. The licence condition does not specify which days the water must be released, but that about 500,000 megalitres, equivalent to one Sydney Harbour of water, be released as soon as possible.

I tried to bring the absurdity of the situation, and the issues raised by Bronwyn Herbert in her reportage last night, to the attention of governments, irrigation companies and the national media last December and provided the supporting information – the leaked documents. At one point a spokesperson for the NSW government said they were working with Snowy Hydro to have the licence conditions changed so that there was no obligation for environmental flow releases while the Murrumbidgee and Murray Rivers were flooding. And Mr Charlton assured me that he would not have been releasing water into saturated catchments except that it was a licence condition he had been trying to have changed since April 2010.

However, as recently as last week I was told by my contact within Snowy Hydro that the Blowering Dam was still spilling and Snowy Hydro was still releasing water from Lake Eucumbene – and no one seems to care. My source is the same person who supplied me with the operational plan that I passed on to Bronwyn Herbert that featured in her reportage. 

Those who live and fish around Lake Eucumbene continue to puzzle over the release of water which is keeping their dam empty when downstream they know there is flooding. And a spokesperson for Snowy Hydro continues to reassure them that it is all the fault of the NSW government who is forcing Snowy Hydro to release water even though it is flooding downstream.

Ms Herbert reported last night that Snowy Hydro was refusing to disclose any data relating to its water releases, but Ms Herbert did not explain that the Commonwealth government as a key shareholder, or the NSW or Victorian governments for that matter, could force the release of the data. But indeed instead of insisting on transparency and accountability from Snowy Hydro, Tony Burke, the Minister for Water, and every other politician and bureaucrat with responsibilities in this area is stonewalling and refused to front the camera – refused to be interviewed on this issue by Ms Herbert.

Before the recent flooding, there was much lamenting about how there is never enough water in the Murray Darling Basin for both irrigated agriculture and also the environment.  Back then, and now, governments and Snowy Hydro have refused to even consider the possibility of the more integrated management of Snowy Hydro waters with management of water allocations within the Basin proper.  

Given the high inflows over recent months it is indeed extraordinary that Lake Eucumbene, the central storage system for the Snowy Hydro scheme, remains at less than 30 percent capacity and that water continues to be drawn from this storage for electricity generation while topping up already spilling dams.

As I explained at my weblog on December 11, 2010:

Blowering Dam may be out of control, the water belting out of Burrunjuck, the Central Murray likely to go under again … but because of a formal agreement between NSW Office of Water and Snowy Hydro, involving an obligation to South Australia, approximately 500,000 megalitres, equivalent to one Sydney Harbour of water, must be released as soon as possible as environmental flow.

In short, senior bureaucrats have signed off on an agreement, which they are now honouring, which requires environmental flow releases into the already swollen Murray and Murrumbidgee Rivers. Of course these men in suits don’t live in the Murray Darling Basin and they will continue to receive a salary, paid into their Sydney bank accounts, regardless of how many extra wheat fields flood and extra homes are destroyed.

What I didn’t know back then, but I do now, is that the formal agreement facilitates derivative trading by Snowy Hydro on the electricity market with the profits flowing to the Commonwealth, NSW and Victorian governments.

I was recently provided with an internal memorandum from Mr Charlton complaining to his staff that someone was leaking information that was potentially damaging to the organization. In the memo, Mr Charlton lamented:

I can’t help but note that the leaker did not, each year, hand back the considerable personal financial benefit derived through incentive payments made possible from financial success as a result of the way we now operate the Snowy Hydro ‘business’.

While Mr Charlton, in operating Snowy Hydro as a business, may be simply fulfilling his obligations to shareholders, surely the Commonwealth, NSW and Victorian governments as the shareholders, have a responsibility to put a stop to the absurdity of the current situation. Indeed it is the ultimate in hypocrisy for Minister Burke to be insisting farmers give back water allocations under the new planning scheme to save the environment, while his corporation wastes water in derivative trading on the electricity market. 



Published in Quadrant Online February 16, 2011

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