Home > News > China

Revealed: our biggest power generator's $400m loss

Tuesday, Nov 03, 2009
点击:
THE country's largest generator, Macquarie Generation, has lost more than $400 million following a slump in the global aluminium price. Macquarie's woes come less than a decade after Pacific Power lost $600 million on ill-fated electricity contracts, forcing the then premier Bob Carr to carve up the NSW electricity industry. Until now Macquarie's loss had been hidden from taxpayers, the company citing ''accounting rules'' as the reason for the loss. Contracts relating to the sale of electricity by the Government-owned generators to the aluminium smelters in the Hunter Valley - Tomago and Kurri Kurri - have been shrouded in mystery since they were signed 30-odd years ago. It has long been speculated the contracted price was exceptionally low. Now indications have emerged that the price Macquarie's largest single customer pays is linked to the international price of aluminium. The Auditor-General disclosed last week that Macquarie Generation had lost $427 million in the year to June 30, due to a fall in the ''value of an electricity contract linked to the price of aluminium''. Macquarie Generation refused to discuss the contract, citing confidentiality agreements with the buyer of the electricity. The loss became public only a matter of weeks after it emerged that Victoria might be liable for more than $520 million to compensate the aluminium giant Alcoa for weak market conditions. Under a contract entered into in the mid-1980s, the amount Alcoa pays for power varies with the aluminium price. Macquarie Generation's largest single customer is Tomago Aluminium, which operates a smelter near Newcastle, with a bonus payment linked to the aluminium price. Neither the Government nor Macquarie Generation would clarify how it was exposed to the movement in aluminium prices. The State Government said that in 2007-08 the contract had generated a $250 million profit for Macquarie Generation. ''The price of aluminium … fell heavily during the global financial crisis, triggering a … write-down on the bonus payment,'' a Government spokesman said. Even though the contract was losing money a year ago, the State Government hid the losses from Parliament, with no mention of them in Macquarie Generation's half-yearly numbers tabled in State Parliament earlier this year. Macquarie Generation is active in derivative markets, and at times its total derivatives exposure has topped $1.7 billion. Several of the state's power companies have previously lost millions on movements in electricity prices, since wholesale prices can surge in minutes to as much as $10,000 from their normal level of about $30-40 a kilowatt hour. Macquarie Generation's managing director, Grant Every-Burns, blamed complex accounting rules for the losses. ''I caution people … from drawing too much from these figures.''

Recommended exhibitions

16TH ARAB INTERNATIONAL ALUMINIUM CONFERENCE
  ARABAL, which is being organized and hosted by Qatalum, is the premier trade event for the Middle East's aluminium i......
Aluminium 2012
  ALUMINIUM is the leading B2B platform in the world for the aluminium industry and its main applications. This is whe......
The 4th edition of Zak Aluminum Extrusions Expo
 Date

  14th - 16th December 2012

  Venue

  Pragati Maidan,

  New Delhi,India.

  Exhibition Timings

 ......
ALUMINIUM DUBAI 2011
Name:ALUMINIUM DUBAI 2011
Time:2011-5-9 to 2011-5-11
Place:Dubai International Convention & Exhibition Centre, Dubai, UAE......