Snowy Hydro chief executive Paul Broad said the company’s $800 million-plus of acquisitions throughout the last financial year are now proving their worth. Nonetheless, further mergers and acquisitions are off the agenda as the focus has shifted to achieving targets and embracing new technology.
The Colongra gas-fired plant bought from the New South Wales government for $234 million saved Snowy’s retail business from a squeeze in the market after a transmission outage, while savings from integrating the Lumo Energy retail business are running ahead of forecast, he said, as reported by The Sydney Morning Herald.
Switched on for the first time in November, Colongra helped meet demand from Snowy’s 140,000 customer-strong retail business in NSW, which otherwise would have been exposed to high wholesale prices.
“It helped us balance our business in the NSW market, which was incredibly important for us at that point in time,” he said.
The Snowy board is understood to have taken some convincing of the merits of the deal, which came just a few months after the $600 million purchase of Lumo from Infratil. The two deals resulted in Snowy’s debt almost tripling to about $1.2 billion although the combined generator-retailer kept its BBB+ rating.
“At the time there was internally a large amount of debate about this risk because it is a risk, and it’s a high risk but it’s quite rare, and to have it so early in the piece, everyone from the board down could see the benefits from it,” Mr Broad said.
He said Snowy was “well ahead” on achieving targeted savings from the integration of Lumo with the company’s existing Red Energy arm. The two have almost 1 million customers combined.
Snowy Hydro runs both brands in Victoria but only the Red brand is being used in NSW and in the small Queensland business, while only Lumo exists in South Australia.