The fundamental driver for water operations of the Snowy Scheme is the Snowy Water Licence.
The Snowy Water Licence, issued by the New South Wales Government, regulates Snowy Hydro in terms of what we can do with the water in the Scheme. It has many legally binding, enforceable obligations on the company.
Snowy Hydro is obligated under the Snowy Water Licence to:
- Target water releases to the River Murray and Murrumbidgee River catchments, the annual volumes of which are determined according to highly prescriptive formulae set out in the Snowy Water Licence;
- Targeting water releases from Jindabyne Dam into the Snowy River for environmental purposes (Snowy River Increased Flows); and
- Facilitating additional natural flows to nominated Rivers for environmental purposes (Snowy Montane Rivers Increased Flows).
To generate electricity Snowy Hydro must release water from the Snowy Scheme, and to release water from the Snowy Scheme, Snowy Hydro must generate electricity.
In this way, water releases and electricity generation are inseparably linked. Snowy Hydro must operate the Scheme to first meet its water release obligations and then to maximise electricity market opportunities within the constraints imposed by the Snowy Water Licence.
Snowy Hydro also has to fund both the debt and operating costs of the Scheme through its participation in the highly competitive National Electricity Market (NEM). Those electricity revenues pay for the increasing costs of maintaining and operating the Scheme, including the costs associated with making environmental flows.
Downstream water users (irrigators and environmental entitlements holders) have never been charged for the water regulation services provided to them each year.
In summary, Snowy Hydro has flexibility from day to day in releasing water from the Scheme as an outcome of generating electricity. Each year, we have to reach certain targets for releases. The short-term flexibility allows us to run our electricity business, while at the same time giving long-term security to the downstream users around annual water releases.
Whilst the Snowy Water Licence recognises the difficulties inherent in achieving precise release volumes at each release point, any shortfall or excess is accounted and generally dealt with by an ‘unders’ and ‘overs’ approach whereby the shortfall or excess is added or subtracted to the following years target i.e. there is no way that Snowy Hydro can consistently ‘under-deliver’ water to any aspect of the release program.
The Snowy Water Licence states that Snowy Hydro has the right to collect, divert, store and release water. That, in no way, represents any form of ownership of the water. The parties who have an entitlement to releases from the Snowy Scheme own all of the water in the Scheme.
This includes the states of New South Wales and Victoria, irrigators from those states, downstream town water supplies and the environment. The water you see in Lake Jindabyne, Tantangara Reservoir, Lake Eucumbene and all of the other Snowy Hydro storages has already been secured and allocated to the above mentioned parties by the Government.
Snowy Hydro has some flexibility around the short-term timing of releases to meet energy generation needs throughout the year. However, by the end of each water year (which ends in April), Snowy Hydro has to have released a predetermined volume of water out of the Scheme. This is one of the legally binding obligations set out in the Snowy Water Licence.
For more information and a full copy of the Snowy Water Licence we encourage people to visit www.water.nsw.gov.au