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.

Also published at Quadrant Online.


11 Responses to Questions over Snowy Hydro Water Management

  1. Richo February 16, 2011 at 10:05 am #

    Was it last week or the week before that NSW had its highest ever energy usage (14500 odd megawatts) during the Sydney heatwave?

    It was fortunate that Snowy Hydro was able to generate a few thousand of those megawatts using fresh air and moonbeams then wasn’t it?

  2. Peter Oataway, Hay, NSW February 16, 2011 at 10:21 am #

    Well put Jennifer

    The amount of wasted Gigalitres of water in the Murray Darling Basin is pathetic

    Snowy Hydro wastage, Menindee Lakes evaporation, Inefficient Water Transmission loses to Environment sites and Water for tax deferring Tree Plantations

  3. val majkus February 16, 2011 at 6:19 pm #

    Jo thanks for pressing this so assiduously; you might be interested I received a nice chatty e mail from my representative senator last night and this was my reply
    Thank you for your e mail; I am a bit unimpressed with your representation; I wrote to you when Malcolm Turnbull was the Leader of the Opposition saying I would never vote for any party who voted for a ETS and got back this spiel about how we had to ‘save the world from global warming’
    I wrote back to you saying that was not good enough and sending up to date peer reviewed paper links which questioned the AGW alarmist warmings
    I have not heard from you since, that was about 2 years ago
    If you want to make yourself relevant to my concerns then please tell me what you think about Senator Barnaby Joyce’s Senate inquiry into the Water Act
    If you need to know more about it see

    I’d like a well thought out comment from you (which is usually what I get when I e mail Tony Abbott; Jo Hockey; Barnaby Joyce and others) but I have never received that from you

    And if you can’t respond to that; then I’d prefer not to hear from you again’
    end of quote

    And I suggest each of us keep doing that; pressing our political reps

    I’m still wondering why the silence from the MDBA affected persons ….

    I seem to recall you had a post coming up …but might be wrong

  4. David Boyd February 17, 2011 at 10:26 am #

    Congratulations on a well researched commentary. The two points I would add are-

    -as the largest dam feeding the MDB, Eucumbene is of critical importance to water conservation and management

    -the dearth of readily available information (it doesn’t rate a single mention on the MDBA website) suggests that someone (like Snowy Hydro, for their derivatives business) has a vested interest in having an uninformed market.

    Your point that Snowy Hydro has an obligation to pursue its shareholders interests is a good one. The Government shareholders need to spell out those interests! Surely they are not simply profitability of the Snowy Hydro business.

  5. debbie February 17, 2011 at 4:58 pm #

    I have just commented at the other SHL post.
    Rest assured that the MDBP affected have not been silenced Val.
    I have been away for 2 weeks and missed most of this.
    What I do know is that nearly everyone below Eucumbene on the Lower MDB is totally flabbergasted at the senseless waste that has been going on. Most people are having trouble believing that this could possibly happen.
    Excellent summary of the issue David. Eucumbene has always been a central part of water conservation and management in our part of the system.
    It is amazing that it is no longer properly connected to the system.
    If profitability of the electricity market is the only driving force then we are all in serious trouble.
    That was NOT the main reason why those dams and that system was built!
    Hydro power was an added extra bonus. The Snowy Hydro Scheme’s main purpose was to help drought mitigation in inland Australia.
    I noticed at the earlier post that people are arguing again about whether the amounts of water relesaed by SHL actually exacerbated the flood.
    I think they are either:
    a) missing the point or
    b) Are not personally affected by this senseless waste or
    c) have other issues that we do no understrand.
    My comment as a personally affected stakeholder in the lower MDB is that it is not a good idea or even good management to tip any water on to a flood if it is not necessary to do so.
    As Max Talbot pointed out in his articles as well as on the 7.30 report, these people have broken one of the basic rules of water management.
    Why on earth would anyone tip water from a nearly empty water storage into a flooded downstream storage? There simply isn’t a single sensible reason why it should happen!
    It does not make sense and no one has given a sensible or honest answer why it was done.
    The common answer is that it was because the licence said it had to be done.
    Unfortunately it is not possible to bring that water back now that it has been senselessly wasted.
    It is also clear that SHL did not need to trash that much water to produce the necessary power.
    It’s about time that our governing water authorities admitted that they did not fix this problem when they had the opportunity to do so. They were repeatedly warned by numerous water rep bodies that there was a potential problem and a serious anomoly in the licence.
    They cannot claim that they did not know or understand the problem.
    For reasons that are still not clear, THEY CHOSE TO DO NOTHING and allowed a minimum of 500,000ML of water to be senselessy wasted down a flooded system. The real figure is probably much higher than this. It was in fact approximately 4000ML to 5000ML every single day for at least 5 months and unfortunately for everyone involved IT IS STILL HAPPENING!!!
    The time in question is just the tip of the iceberg.
    Thanks Jennifer for keeping this issue highlighted.
    It is a microcosim of much that has gone wrong with water management in our country.

  6. val majkus February 17, 2011 at 5:39 pm #

    Debbie so pleased to see you back! and did you notice my comment on supporting Sen Joyce’s app and linking David Boyd’s article

    do you have anything to say about that

  7. debbie February 17, 2011 at 6:19 pm #

    Thanks Val,
    I certainly did.
    Three cheers to Barnaby. That would have been a tricky act to pull off!
    It’s nice to see that at least some of them are prepared to admit they may have made a mistake.

  8. val majkus February 17, 2011 at 6:29 pm #

    and Debbie will you be doing a post for Jen to consider as one of the to be affected MDBA farmers

    and would there be others in your region who would be interested in submitting posts for Jen to consider ( for example co operatives and the like) and experiences with the TW ‘road show’

  9. Richo February 17, 2011 at 7:17 pm #

    I’m just annoyed that Jennifer and the 7.30 Report (whom Jennifer obviously fed) have unfairly impugned Snowy Hydro by saying that they recklessly or negligently exacerbated flooding, when there is no grounds for saying that.

  10. Debbie February 18, 2011 at 8:36 pm #

    That’s fine Richo,
    It doesn’t change the fact that it was just plain dumb!
    We all need to be careful that we don’t miss seeing the water for the flood.
    It is not good management practice to empty the dam at the top of the system into flooded downstream storages. SHL had to do it because of their licence. Therefore the licence was deficient. They (NOW and SHL) all knew about it and chose to do nothing.
    It is nothing short of infuriating.
    As Jen has repeatedly pointed out it is ridiculous for govt bodies to demand water from irrigators and then senselessly waste it down a system that cannot cope with it.
    There is no question that SHL tipped approx 6000ML on top of the worst of the flood on Dec 8th and that they were doing so for months before and have been doing it since.
    The real question is WHY?
    The environment definitely doesn’t need it.
    SHL does not need to release this much water to produce power.
    Irrigators can’t use it because it can’t be stored anywhere else.
    Even the lower lakes don’t need it.
    That was why I made the comment about missing the point.
    Same goes for Poly and Ian Mott.
    I’m quite sure if any of you lived downstream and also had water entitlements, you would be just as infuriated.
    Yes, flooding was more dramatic in other places. That doesn’t change the fact that the management of water during the floods in our part of the system was very, very poor.
    It also doesn’t change the fact that NOW and SHL are not being honest about their reasons for this behaviour or forthcoming with detailed inflow and outflow figures.
    It is not good enough!

  11. el gordo February 19, 2011 at 11:09 am #

    Good news for the Murray and flood plains.

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