Taxpayers foot $300,000 Hydro legal bill

Hydro Tasmania chairman David Crean and Energy Minister Bryan Green yesterday.
Hydro Tasmania chairman David Crean and Energy Minister Bryan Green yesterday.

TAXPAYER-owned Hydro Tasmania has revealed it had to spend $700,000 clearing its name after Aurora Energy called in the national competition watchdog.

And it was all over a $300,000 bill.

Hydro was accused of "price gouging" $20 million out of Aurora in a controversial incident in April 2009 - but actually only charged the retailer $300,000.

Hydro chairman David Crean revealed the resulting Australian Competition and Consumer Commission legal battle cost the company $700,000 and eventually cleared Hydro's name.

"We spent a heap on doing this, it was distracting and we knew we had no case to answer," he said in a government business enterprise hearing yesterday.

"You can understand why we get a little bit hot under the collar when we read reports (about $20 million)."

The revelation came as the Auditor- General reported the government did not know about Aurora's profitability problems, although there were significant warning signs two months before Labor promised to cap power price rises at 5 per cent.

The Hydro-Aurora dispute started over an incident involving frequency control ancillary services, which Aurora had to buy to cover power it generated at the Tamar Valley Power Station.

Hydro was accused of using its control of the process to jack up the price for Aurora.

In a submission to the Tasmanian Economic Regulator for a power- price increase, Aurora said Hydro's ancillary services policy could be "ruinous" for the energy retailer.

Dr Crean said yesterday he did not know how a $300,000 charge could be ruinous for Aurora.

Greens energy spokesman Kim Booth made a similar point.

"Last year Aurora claimed that Hydro was ruining its business through the imposition of a $20 million FCAS fee, and made complaints about Hydro's behaviour to the ACCC and to the Economic Regulator," he said.

"But according to sworn evidence given on oath today, we find that the actual amount was only $300,000."

Mr Booth asked why it had taken so long for the government to set the record straight and defend the Hydro, which had been painted as one of the reasons why Aurora had struggled financially.

Hydro finance general manager Lance Balcombe said the company was not able to publicly reveal the figure while the ACCC investigation had been going.

Aurora Energy executives are due to appear before a Legislative Council committee tomorrow morning.