The Federal Government has reached an agreement with the New South Wales and Victorian Governments to take full ownership of Snowy Hydro, paving the way for the Snowy 2.0 pumped hydro project to proceed to a final investment.
NSW is set to receive $4.154 billion and Victoria $2.077 billion, reflecting their respective Snowy shareholdings, with proceeds to be reinvested into productive infrastructure projects.
The agreement also builds on the Federal Government’s substantive energy sector reforms to ensure reliable and affordable energy for businesses and households.
The purchase will see this iconic infrastructure remain in Australian Government hands, and NSW and Victoria will receive a fair market value for an important energy asset. The deal will be contingent on the Victorian Parliament confirming the sale and the Commonwealth Parliament passing an appropriation bill.
Snowy Hydro 2.0 is expected to provide increased levels of renewable energy into the national energy market – and is consistent with Australia’s energy policy commitments.
In an important win for farmers, Victoria has ensured the agreement with the Commonwealth will not result in any changes to the current water arrangements for the state.
Premier, Daniel Andrews, said, “This is a historic deal that’s good for Victorian households, and good for our economy, as we continue to build the infrastructure and create the jobs our state needs for the future.”
Victorian Minister for Energy, Environment and Climate Change, Lily D’Ambrosio, said the deal is in line with energy policy commitments and is expected to see more renewable energy put into the national energy market.
The Commonwealth has also provided assurances that conditions for those employed by Snowy Hydro will not materially change, with no forced redundancies for two years for Victorian-based operations.
Key terms reached as part of the purchase are:
- The Australian Government will increase its shareholding from 13 per cent to 100 per cent by purchasing NSW’s (58 per cent) and Victoria’s (29 per cent) shareholdings. The agreed fair market value of the enterprise is $7.8 billion. Allowing for Snowy Hydro’s debt as of 31 December 2017, NSW will receive $4.154 billion and Victoria $2.077 billion
- NSW and Victoria will invest proceeds of the sale into productive infrastructure, further boosting their already substantial capital works budgets and providing a vital boost to the national economy
- NSW will provide all reasonable assistance to Snowy Hydro in relation to its current and future operations (including planning and approvals process for Snowy 2.0)
- The Australian Government will provide an assurance that Snowy Hydro will continue to be a successful operation. Importantly, it will continue to be in public ownership, and employment levels and existing head office locations will not change
- There will be no change to current arrangements on water issues
- The transaction will not affect allocations of GST for NSW or Victoria
Snowy Hydro is a critical player within the National Electricity Market. The company owns and operates 5500MW of generation capacity including the iconic Snowy Mountains Scheme. Snowy 2.0 is a proposed expansion of the Snowy Mountains Scheme and will provide an additional generation capacity of 2000MW to power about 500,000 homes at peak demand.