HYDRO Tasmania has been saddled with the Tamar Valley Power Station as part of the latest stage of Tasmania's energy reforms announced yesterday.
Energy Minister Bryan Green said the costly station could affect Hydro's bottom line ``to a small degree'', and that in turn could affect government coffers.
``We know that the power station has been difficult, for Aurora on its books, but my expectation is that Hydro will be able to utilise that asset in a different way to Aurora so we will get maximum advantage for it,'' Mr Green said.
He said Hydro would ``probably have preferred not necessarily to have it'' but the Tamar Valley station was not a lame duck and would add to Tasmania's energy security.
The transfer was announced alongside plans to divide Tasmania's customer base in half and sell it off to competing retail companies, as part of a six-month switch to full retail contestability that will begin mid-year.
The Pay-As-You-Go customer base will be sold separately.
Customers will not have a say in who their initial new retailer is, but may be able to change a few months in and will be able to sign up with any available retailer from January 1 next year.
The government has released a position paper on the reforms and announced plans to table new energy legislation next month.
Mr Green said increased competition would create cheaper electricity for customers.
Tasmanian Small Business Council executive officer Rob Mallett said the change would eventually result in cheaper power prices for small businesses, but questioned why just two retailers would be allowed in the market this year.
``To some degree it's delaying the full benefit of full contestability for us, but we see the light at the end of the tunnel,'' Mr Mallett said.
He also criticised the government for allowing just 10 business days to respond to its position paper.
Tasmanian Chamber of Commerce and Industry economist Phil Bayley said the initial switch to two retailers was the best way forward.
Opposition energy spokesman Matthew Groom said he supported full retail contestability but questioned whether the government policy would be able to deliver it by January 1.