Electricity generation from its hydro resources were only 7,158GWh in the fiscal year, or 79% of that expected. The fall in output has been marked in the last two years, dropping successively from the levels of approaching 10,000 GWh previously.

To meet the state’s total demand of 10,500GWh in the year, the utility produced 1,169GWh from the Bell Bay power plant and there were net imports of 2,264GWh across the Basslink interconnector. The link has played a increasingly important role in making up the shortfall in hydro output.

By early June hydro storages were 16.5%, the lowest level in 40 years. Rains shortly after lifted the storage to 19.1%, which was slightly less than at the same time in the previous year. Since mid-year the volumes have improved to 29.6% but this is still less than the 32.6% held at the same time a year ago.

Storage volumes are significantly down on those of a decade ago when seasonal cycles turned around the 70%-80% range. However, levels were on the slide over 1998-2002 to cycle around the 30%-40% range only to further weaken in the last two years.

In a statement, the utility’s chairman, David Crean, said: ‘Tasmanians should be under no illusions about the impact of two years of drought and a decade of below average rainfall on our operations.’

Hydro Tasmania reported an operating loss of Aus$58M (US$35.6M) for the fiscal year compared to a profit of Aus$19.5M last time. Total revenues were down 4.5% to Aus$470M.

The financial impact of the drought on the utility has cost it an extra Aus$120M to cover higher charges of net imports and also natural gas purchases for Bell Bay. More expensive generation could not be recovered from, for example, those major industrial customers on long-term supply contracts.

In May, the Government injected Aus$270M, helping the utility to reduce debt. However, average rainfall over the last two years would have enabled debt to be Aus$200M lower, said Hydro Tasmania.

Chief executive, Vince Hawksworth, said: ‘Recent rains have been encouraging but we must be prepared for the prospect of a dry summer and we will continue the downward pressure on costs.’

The utility is redeveloping the Lake Margaret plant and is finalising plans for mini-hydro projects.