The federal labor government pushed its wholly owned energy generator and retailer Snowy Hydro to show “market leadership” in the midst of the energy crisis that gripped the country last winter and sent wholesale and customers prices soaring.
In a letter published as part of a package of documents released under the Freedom of Information Act, federal energy minister Chris Bowen and finance minister Katy Gallagher told Snowy chair David Knox the company had a key role to play in the market.
“The government expects that (Snowy Hydro) is engaging in good faith with market bodies to take necessary actions to maximise its available resources, in energy level and capacity in this period,” the letter, sent it June, said. It asked for generation and bidding data to prove that this was the case.
The FOI documents note a response was sent by Knox on June 22, but it does not reveal the contents of that letter.
The government’s intervention is significant because the role of the government-owned Snowy Hydro in the market is important: As the owner of many of the “peaking” plants – pumped hydro, peaking gas and diesel – and as the dominant player in the contract positions, Snowy Hydro is one of the major price setters in the National Electricity Market.
The crisis that led to soaring prices and an unprecedented market suspension sparked huge criticism of the actions of major generation companies – including from regulators – and government entities came under intense scrutiny because they are owned and funded by taxpayers and consumers.
The series of documents released in the FOI bundle also point to some of the tensions between Bowen’s office and Snowy Hydro in the lead up to the abrupt resignation of CEO Paul Broad in late August.
That resignation came after publication or reports that the budget for the controversial Snowy 2.0 pumped hydro project had blown out by $2.2 billion. Broad had told Bowen that he was confident that the reports would not be published. “I believe the story will not go ahead,” he advised Bowen on August 15.
But less than a week later they were, and just days later Broad handed in his resignation. Before that, late in the evening on Monday, August 22, Broad had sent an email to Bowen’s office decrying the “unsubstantiated” and “spurious” claims, and also referring to the company’s update hydrogen strategy.
That strategy was based on a response to Bowen’s insistence that the equally controversial Kurri Kurri gas plant in the Hunter Valley funded by the previous Coalition government aimed to have at least 30 per cent hydrogen component.
There were apparent delays in finalising that report, and the correspondence also reveals that Snowy Hydro is, or at least was, planning to build its own solar farm at the site to provide renewable power to create green hydrogen.
Broad finished the letter by pointing to various company newsletters that highlighted “plenty of great updates” from the region, and promised to “be in touch” in any significant matters arose in that week.
The next day, Knox met with state and federal energy ministers on August 23, where he was warned that Snowy’s board needed to lift its game on communication.
“The minister [Bowen] was very clear that he needed to see those communications improve that they were unsatisfactory,” Knox told a Senate Estimates hearing.
“And that was one of the core bits of feedback we had from that meeting. And I took that away and, obviously, fed that back to my chief executive.”
Broad was gone by Friday and several weeks later revealed that one of the major points of disagreement with Bowen was about Labor’s insistence that the gas plant be converted to hydrogen, and the costs involved.
Broad is currently serving as a “special advisor” to NSW state premier Dominic Perrottet. Has been named Dennis Barnes as the new CEO of Snowy Hydro.
