The Government is committed to prudently managing taxpayer-owned government businesses.
The capital structure of the Energy Businesses has been reviewed and advice has been provided to Government from Treasury, Pricewaterhousecoopers and the energy businesses.
As a result the Government has made a decision to rebalance the way debt is allocated between our energy businesses, and approved the transfer of $205 million of Hydro's debt to TasNetworks.
A further $120 million of debt (making a total of $325 million) is intended to be transferred over the next two financial years.
The $205m debt transfer will relieve Hydro of the debt burden placed on it by the former Labor-Green Government when they transferred to Hydro the debt associated with the purchase of the gas-fired Tamar Valley Power Station (TVPS).
Labor inexplicably paid $160 million above the actual value for the TVPS. This has proven to be one of worst decisions in the history of energy policy in Tasmania.
As outlined at GBE Estimates last year, Hydro is considering the option of divesting the closed cycle gas turbine at the TVPS and running the remaining turbines as peaking units.
Under the current circumstances, it's clear that Labor and the Greens forced too much debt onto Hydro.
Hydro operates in a highly dynamic and competitive market and its current level of debt is impacting on its ability to compete in the market. This Government will support Hydro in its efforts to be right at the forefront of power generators in Australia and to deliver on the historic investment in Hydro that generations of Tasmanians have made.
Equity transfers through the restructuring of debt between Government Businesses are not unusual and will not in any way impact on power prices, which are strictly regulated.
This is an equity transfer that TasNetworks is more than capable of handling, with no impact on power prices, and which will help Hydro reach its potential.