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Snowy Hydro derivatives play submerges farmers

By Jennifer Marohasy - posted Thursday, 17 February 2011


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:

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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.

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This article was first published at Quadrant Online on February 16, 2011.



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About the Author

Jennifer Marohasy is a senior fellow with the Institute for Public Affairs.

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