21.jpgThe Committee examined the system capacity and likely demand to ascertain if adoption of the moratorium proposal would result in a shortfall of ability to meet likely demand.
This examination is made against a background of recent growth in demand being less than anticipated, reflected in the following:
the Gordon scheme was orginally planned for service in April 1973; it is now planned for service in 1976.
Bell Bay No. 1 Unit was planned for service at 80 per cent load factor in mid-1971; it has been used at only seven per cent of capacity to April 1973.
the Pieman scheme was recommended to be operating not later than 1979, with the possibility of being brought forward one year. It has been deferred and is now planned on the basis of the smallest unit being commissioned in 1980.
Thus the indications are that, for the short term at least, Tasmania has an unexpected surplus of generating capacity.
The HEC report on the Pieman River Power Development is the most recent statement about future system capacity. It quotes system capacity; without the Pieman but including the Middle Gordon, as 9280 million kilowatt-hours per annum (units). Of this, the Gordon contributes 1333 units; hence the remainder of the system provides 7947 units.
So far as the moratorium proposal is concerned, the critical period to be examined is 1976-1980 because 1976 is the earliest the Gordon can be used in any case and, in 1980, the Pieman will become available.
In discussing likely future demands the Committee has the difficulty that the HEC provided demand information but, without seeking our prior agreement to the condition, added that it was provided "on the basis that he information remains confidential to members of your Committee and is not published". We, as a Committee, deplore such restrictions on public discussion which appear quite unnecessary. It may be observed that the HEC had consistently published earlier forecasts and later provided information on
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this question to the Lake Pedder Action Committee without any request for confidentiality. in the letter to the Lake Pedder Action Committee, the Commission advised that it was currently using an annual growth rate estimate of 5 per cent. Information given to our Committee indicated that this was an upper limit and that forecast growth rates of substantially less than this figure were also being used. The Committee has therefore based its calculations on two possible growth rates, 5 per cent and 3% per cent.
Using these growth rates, we calculated energy demand for the years 1976-1980 as below:
Units
Year 31/2% 5%
1976 6487 6872 1972 = 5653 units
1977 6714 7216
1978 6949 7577
1979 7192 7956
1980 7444 8354
It can be seen that, with a 3'/2 per cent growth rate, the estimated demand in 1980 (7444 units) is less than the capacity of the existing sanctioned developments, excluding the Gordon scheme totally (7947 units). In other words, no power would be needed from the Gordon to meet demands until after t 980, if this rate of growth eventuated.
We interpolate here that we are aware that use of the Gordon scheme may be cheaper -at this stage we are concerned only with the adequacy of the system. Cost will be examined later.
If the higher estimate of five per cent growth should eventuate, the demand in 1979 (7956 units) will equate with the system capacity without the Gordon (7947 units). In this case the Gordon will be needed to provide power before the Pieman is available.
We now examine the likely availability of power from the Gordon, both under the current theme and on the basis that the moratorium is adopted.
Under the current scheme, with average river flows, Lake Gordon will be at a level of SL952 by mid-1976 when the first generating set is expected to be available for service. We understand that current plans are for three machines to be installed. Thus, the first machine should yield 444 units a year. This figure may be marginally reduced because the water level is less than the mean operating level, but the effect would be small and extra water could be used. The lake will continue to fill because generation at this rate will use only about one third of available water. As later machines are brought on line, at perhaps six to nine-month intervals, the output from the Gordon scheme will rise to 888 then 1333 units. to give a total system capacity of 9280 units by, say, 1978, at latest. This capacity is well ahead of anticipated demand.
The effect of adopting the moratorium will be that Lake Gordon will fill more slowly and, while the moratorium lasts, only the water from the Gordon River will be available. On this basis, the level in Lake Gordon in mid-1976 would be about SLSOO, which is above the minimum operating level of SL840. Thus, the station could be used, if required, although the output would be reduced because of the reduced head. The normal loss of power will depend on the characteristics of the machine we estimate that the loss will be not greater than 20 per cent. Our subsequent calculations are based on a 20 per cent loss.
On this basis the first Gordon machine could deliver some 356 units a year from mid-1976, with the lake level continuing to rise. Installation of the second machine would yield further power but not to the capacity of the machine because the water from the Gordon River alone can yield, on average, only 800 units a year at full head. Allowing a 20 per cent loss from reduced head, it thus appears that the Gordon River alone could, if required, yield some 640 units a year from 1977. Thus after 1977 the total system capacity for the State would be 8587 units, comprising 640 units from the Gordon and 7947 units from other stations in the system. This capacity compares with a demand in t 980 of 8354 units, using the highest of the HEC growth rate estimates.
Further generating capacity could be provided by using the waters of the Serpentine and, possibly, the Huon. The former can provide 367 units at full head, the latter t 66 units.
If, following a moratorium period, it were decided to reflood, it would take about two years for the Serpentine/Huon impoundment to refill and spill into Lake Gordon. Thus a five year moratorium from 1973 followed by re flooding would yield power from the Serpentine and Huon by 1980; a three year moratorium, by 1978.
If, on the other hand, an alternative scheme were adopted involving pumping through a tunnel from the Serpentine, it again appears that two years should suffice to deliver water into Lake Gordon. It will be remembered that the Lake Gordon level will be low, hence gravity flow will be practicable. Thus the pumps will not be required initially and their delivery/installation time is not critical. We understand that they could be delivered and installed in some three years. The tunnel would be of the order of two miles long, well within the capacity of the HEC to build in two years. Thus, gravity flow would be possible in two years and pumped in three, after the moratorium.
Without the Huon, then, it appears that total system capacity could be some 8900 units in 1978, after a three year moratorium and allowing for a loss of power from the reduced level in Lake Gordon. The maximum demand estimate of 8354 units appears well covered. It may be considered necessary to provide further capacity against unforeseen demands. This can be done, as explained below, but we would agree with the HEC in its report on the Pieman scheme: ".....it is essential to avoid the cost of having large amounts of spare capacity merely to cater for the possibility of meeting large increases in major loads, for which, in any case, contracts have to be negotiated over a period of time. "
However, should further capacity be required, the following avenues, at least, are available:
1. The Pieman scheme could be expedited, possibly including rearrangement of the order of construction so that major units are brought in first. The HEC report on this scheme states "The Commission proposes that it be planned so that it can be commissioned one year earlier in order to meet unforeseen loads should they occur."
2. A thermal station similar to Bell Bay can be commissioned in three-and-a-half years.
3. Existing developments could be augmented, as described in the HEC Pieman report, to provide additional output.
4. Existing storages could be drawn down. The Pieman report says: ".....it is normal for storages to build up upon completion of a scheme and to be drawn down prior to commissioning of the subsequent scheme. "
The foregoing calculations have been based on the assumption of average flows into the Gordon storage and normal operation of the remainder of the HEC's generating system.
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More precise calculations would depend upon hydrologic and operational data not available to the Committee. A detailed investigation of alternative ways and means for operating the overall system to cope with the moratorium proposals suggested and to minimise the cost of generating energy from alternative sources could readily be undertaken via system simulation studies on the Commission's computer. The approximate figures we have derived are nevertheless quite accurate enough to demonstrate the likely consequences of the moratorium proposal and indicate that system demands could almost certainly be met even if a five year moratorium were to be adopted and unexpected load growth or a sequence of drought years eventuated. It might be noted that HEC calculations of system capacity, on which our estimates are based, are computed on the assumption of a critical storage period of 10 years which includes the 1967 drought and a further hypothetical drought period.
In summary, this Committee considers that adoption of the five year moratorium proposal would be unlikely to prejudice the ability of the HEC to meet expected power demands. Reduction of the moratorium period to three years would provide even greater assurance. We consider that three years would be an adequate length for a moratorium, because this period should be adequate to give a clear idea of the likelihood that the lake would recover acceptably and quite sufficient for any studies required. Possibly, even two years wouId suffice. In our view, if the proposal were adopted, there should be an annual review with the aim of keeping the moratorium period as short as possible.
In this report, we have assessed the cost of adopting the moratorium proposal on two bases:
1. that the eventual decision is to reflood; and
2. that the eventual decision is to adopt an alternative scheme involving using the Serpentine but not the Huon water.
The moratorium period is taken at three years.
The cost of adopting the moratorium would be the costs incurred over and above those involved in the present scheme. Thus, for example, the interest charges on works in the current scheme are not relevant to the discussion on the moratorium, because they will be incurred whether or not the moratorium proposal is adopted.
There would be some costs involved in releasing sufficient water through the construction diversion on Scotts Peak dam, but it would appear that these would be relatively insignificant. The major cost arising from the moratorium would come about because the water from the Serpentine and the Huon would not be available. In our view, the absence of these waters would not involve the HEC in any loss of revenue, but it may involve additional costs. We consider that the HEC would have generating capacity to meet likely demands, hence there will be the same revenue income whether or not there is a moratorium. However, unavailaibility of some water may mean that, with a moratorium, it may be necessary to run the oil fired thermal stations rather more than would be necessary if the current scheme were retained.
Thus, in effect, the cost of the moratorium is the cost of running the Bell Bay stations instead of the Gordon.
All the facilities involved will be in existence whether or not there is a moratorium, so, once again, their interest and other fixed charges will be incurred in any case and hence are not relevant to this discussion. The costs we are concerned with are the running costs. For a hydro station, these are effectively nil, for a thermal station the running costs cover fuel and some maintenance. In this Report we have used a running cost of 0.34 c/kWhr, based on information for Bell Bay in the HEC report on the Gordon scheme.
There is a multitude of ways of running the overall HEC system, and computer studies would be needed to determine the overall optimum. We consider that, if the moratorium proposal were adopted, the costs should be determined on the basis of a comparison of the optimum way of running the system under the current plans, against the optimum way of running it under the moratorium.
However, to give an idea of what these costs are likely to be, we have carried out calculations which believe yield maximum estimates of the likely costs. The calculations are detailed in Appendix Il, together with particulars of the assumptions made.
There are two elements in the costs attributable to the moratorium. The first would arise over the period 1976-1980 from the extra running of the Bell Bay stations to make good the shortfall in power output from the Gordon. The second is a potential cost which might arise in 1980 and thereafter, because, under the moratorium, the water level in the Gordon impoundment in 1980 will be lower than under the present scheme. Thus the unaltered scheme would have the potential to generate more energy after 1980 than if the moratorium were adopted. It appears possible that the Pieman scheme could be built and operated in such a way as to provide a surplus capacity which would allow the Gordon storage to fill in either case. If this were so, there would be no direct costs involved, directly attributable to the moratorium -we are not able to assess what costs, if any, might be involved in any required reorganisation of the Pieman scheme. On the other hand, in the extreme case, it may prove necessary to provide the whole shortfall of potential energy from Bell Bay.
The costs for the period 1976-1980 can be assessed with reasonable assurance for the various cases:
annual demand growth 3% per cent and 5 per cent
eventual decisions reflood, and adopt Alternative 3.
The costs are:-
Demand Cost
Eventual growth rate $ million
decision percent
Reflood 5.0 3.8
Reflood 3.5 nil
Alternative 5.0 4.7
Alternative 3.5 nil
The potential cost, for the period after 1980, can be assessed by estimating the difference in water storage in the Gordon at the end of the period, converting to potential energy production and costing this at the variable cost of the Bell Bay station. In the extreme case, with demand growth of five per cent and adoption of an alternative scheme, this cost could be $6 million.
There are many alternative possibilities in the above analysis, with varying degrees of likelihood. We consider it not unreasonable to suggest that the likely total cost of the three year moratorium would be a maximum of about $8 million and it could be much less. This is estimated on the following basis: a cost of $4.7 million in the period 19761980 from demand growth at the highest estimated rate of five per cent, followed by adoption of an alternative scheme (which would have its own costs, discussed later) a further cost of the order of $3 million, covering some additional cost on the Pieman scheme to provide surplus hydro capacity in 1980, and covering also some additional running of the Bell Bay station in the period after 1980.
These costs may be offset to some degree by revenue available from the removal of millable timber from the Gordon impoundment. We were given conflicting opinions about the value cf timber in the Gordon valley, with some estimates as high as $50 million. It appears to be agreed that there are valuable stands of timber in the area and that the time limits imposed by the present scheme will make it difficult to complete the job of salvaging this timber.
Clearly, adoption of the moratorium, which involves a reduced rate of flooding of the Gordon valley, will be of value to the timber industry.
Although, as noted, it is not possible to assess accurately the costs of any alternative scheme, some estimate of the cost of at least the most likely acceptable alternative scheme needs to be advanced if sensible consideration is to be given to the moratorium proposal; there can be little point in a moratorium period if all alternatives are regarded as likely to be too costly to
implement. For this reason the Committee investigated the cost of the alternative scheme which appeared to them to be the most acceptable, that is, forgoing the power available from the Huon water and pumping the Serpentine water into the Gordon impoundment,
A letter from Premier Bethune to the Tasmanian Conservation Trust, dated 13 March 1972, quoted the capital costs involved in this
alternative as:
Modified spillway at Serpentine Dam $1,000,000
Serpentine pumping station and tunnel 3.500.000
Pumps and motors 4,500.000
Additional camp costs 200.000
$9.200.000
These costs would be incurred over the period 1976-1979. The letter also sets out other costs on which we comment as follows: Capitalised value of energy used for pumping $1,700,000
No details are available as to how this cost has been obtained. We estimated the capitalised cost of providing the energy needed to pump the average Serpentine flow against the mean operating level of Lake Gordon. This cost is of the order of $1.7 million which is therefore accepted for estimating purposes at this time. Value of water lost due to the delay in diversion of Serpentine yield to the Gordon storage $4,000,000
This cost is provided for in the previous calculations of the cost of the moratorium. Additional interest charge due to delay in completion of the Serpentine diversion $700.000
We are unable to determine how this cost arises. One possibility is that it represents an interest charge over the construction period. Since the amount involved is relatively small. we include Value of energy in Huon water permanently lost $11,000.000
The Committee asked the HEC for details of this cost but they were not provided. We calculate the value of the Huon water as the dost of providing from another source an amount of energy equal to that which would have been provided from the Huon. This is calculated as follows: the Pieman, the next scheme to be built, will yield 1770 million kWhr a year from an investment of $114 million. The Huon flow of 446 cusec will provide 167 million kWhr a year. On this basis, replacement of the Huon power will cost $10.8 million, which compares with the HEC estimate of $11 million. We therefore accept the HEC figure.
Our calculation makes no allowance for the cost of not using Huon water in possible future power developments on the Lower Gordon, which, if undertaken would be well into the 1980s. Nor does it allow for any possible benefit from using the Huon water for power generation elsewhere on the Huon or for controlling water quality problems on the Huon. These two possibilities would occur well into the future and work in opposite directions on the cost analysis. We have assumed that the cost of not using the Huon is only the immediate and
obvious one. In summary, the estimated costs involved in this particular alternative are:
Capital works $9,200.000
Capitalised pumping cost 1.700.000
Interest 700.000
$11,600.000
say $12 million
Value of Huon water forgone 11,000.000
$22,600.000
say $23 million
If this alternative scheme were adopted, these costs would be incurred from 1976 onwards.
The costs for this alternative are estimates only and are given merely to provide some indication of the likely order of cost for re storing Lake Pedder. More precise derivation of costs would be possible during a moratorium period when, for example, the cost of capital works could be assessed on the basis of preliminary designs. Operating costs, such as pumping, couId be assessed on the basis of actual expenditures from year to year. Alternatively, it would be administratively simpler if agreement could be reached on a Lump sum payment equivalent to the capitalised value of such annual payments. The value of lost water would probably be best handled on a capitalised basis, assessing the cost of facilities required to provide a compensating amount of energy. Again, it would appear appropriate to make this calculation on the basis of actual operating experience. The various cost calculations would also determine the appropriate times at which the various payments should be made.
In this report we have estimated that the expenditure involved in implementing the alternative which appears most acceptable would be $8 million for the moratorium and a further $12 million for the alternative. Additionally, there is a loss of some $11 million from not using the potential of the Huon River. It is necessary now to pose the question: whether the restored Lake, assuming an acceptable degree of recovery, would be worth the cost involved? Unless this question can be answered in the affirmative, no further consideration need be given to the moratorium proposal.
Essentially the question involves setting a monetary value on those qualities of Lake Pedder that no longer exist because of the Gordon scheme, but which would reappear in a restored Lake Pedder. It involves, therefore, setting some value on Lake Pedder as part of a reconstituted National Park, as part of an extensive wilderness area, as a locality of scientific interest, and as a place of beauty. In short, it involves the valuation of a series of intangible benefits against a known tangible advantage, the economic value of the unmodified Gordon scheme (and some intangible advantages of this scheme).
There have been many instances in past Australian history when a natural feature was given a negligible economic value because it could not easily be valued in a direct economic manner. Few would argue that this practice is one which Australia should continue to follow; there is an increasing awareness that Australian Governments at both State and Federal levels should, and indeed must, be prepared to forgo certain economic advantages in order to preserve some environmental and other natural features which do not of themselves produce revenue. The basic question remaining is how much economic advantage must be forgone in order to preserve a given feature.
An indirect way of arriving at some value for Lake Pedder is to compare how much has been spent by governments to preserve other features that are likewise of largely intangible value. A few examples only need to be given.
1. In 1971 President Nixon order a halt to all construction by the U.S. Army Corp of Engineers of the Cross Florida Barge Canal, the total cost of which was to have been some $185 million. At the time of the halt some $50 million had already been spent. This halt, together with the purchase of about 1 million acres of land in central Florida, was taken to ensure an adequate supply of fresh water to the Everglades National Park.
2. The Queensland Government has consistently refused to grant leases to mining companies wishing to exploit the mineral wealth of the Cooloolah sand mass. The estimated mineral value of this mass is between $125 and $150 million. The refusals are based on the fact that the Queensland Government intends to create in the area a National Park and Forestry Reserve.
3. The United Nations has spent some $48 million to raise an Egyptian temple at Abu Simbel to prevent the Aswan dam from flooding
The building of an opera house in Sydney for some $100 million is also not without significance here; whilst this did not involve the preservation of a natural or historic feature it did involve the assumption that a building constructed basically to further an intangible phenomenon, culture in the wide sense, is worth at least $100 million.
It is obviously impossible for anyone to make a direct estimate of the value of Lake Pedder and its environs, but many witnesses were prepared to say that the lake was, in their view, "priceless" or putting it another way, certainly worth the cost involved in its restoration.
In addition to the intrinsic value of the lake, various witnesses spoke to us of Lake Pedder as a kind of symbol, and the decision on its future as being a turning point for the Australian nation's self-awareness and confidence in the excellence of its own landscape. The controversy over the flooding of Pedder has certainly been the most sustained, the most widespread and the most deeply felt, of any conservation issue which has yet arisen in this country. Of all the natural assets yet threatened by development in Australia, Lake Pedder is seen as the most precious. If Pedder is destroyed, it has been argued, than no natural feature of Australia is safe from economic predation no matter how valuable aesthetically, scientifically, historically or spiritually such a feature may be. The President of the Australian Conservation Foundation, HRH Prince Philip, has this to say: "There is no doubt at all that the saga of Lake Pedder will go down in Australian history..... Many people believe that the decision to flood Lake Pedder was a mistake..... I very much hope that never again will Australians have cause to question so vehemently a decision on any conservation issue."
Subsequently, the Foundation presented to us a submission which stated amongst other things: "The Australian Conservation Foundation believes that Lake Pedder should be saved by releasing the impounded water and restoring he lake..... If in the light of current day values it is considered that the 1967 decision was a mistake it would be irresponsible if the decision were not reversed."
It is evident that the cost would not be small for implementing either the moratorium, or, if adopted following a moratorium, an alternative to the present Gordon Scheme. Both would involve the expenditure (or loss) of significant amounts of money.
With regard to the costs of alternatives, Tasmanian Governments have consistently stated that the costs of adopting any alternative scheme are too great for the State to bear. Even if this were questioned, it is quite apparent that the Government of Tasmania will not agree to bear the costs, at this stage. There was general acceptance of this state of affairs by those witnesses proposing alternatives; in their view, the costs involved in alternative schemes should be borne by the Australian Government.
In summary, the reason advanced for this view was that whilst the Gordon scheme is of essentially regional (State) importance, the maintenance and restoration of Lake Pedder is of national importance. This being so, it was argued, the national Government should pay for any loss that the State would incur as a result of modifying the Gordon scheme to satisfy national interests. Thus, it was argued, the advantages of restoring Lake Pedder concern not only Tasmanians but a// Australians -its restoration as a National Park, as a wilderness serving south-eastern Australia, as an area of scientific value to the whole country, and as a place of outstanding beauty.
This Committee accepts the viewpoint that the issues involved are wider than State issues, that the future of Lake Pedder is of national interest and importance, and that, if there is to be a moratorium with the subsequent possibility of implementing an alternative scheme, the costs of both the moratorium and any alternative scheme should be borne by the Australian Government, not the State of Tasmania.
The final judgement concerning the fate of Lake Pedder must be made at the political level, that is by those whom Australians have elected to decide on national and State priorities and needs. Our role is to assist this judgement by providing an assessment of the facts and opinions on the matter, so far as we can ascertain them. It is also our role, having considered the submissions presented to us, to express the opinions and views we have formed. In general, these have been given in the body of this Report. In summary they are:
1. The decision-making process which led to the flooding of Lake Pedder had weaknesses.
2. The evidence concerning the recovery of the lake indicates that it is highly likely that the lake would recover acceptably if restored to its normal level during 1973.
3. The Lake Pedder National Park was proclaimed a scenic reserve in 1955 in the normal way; the boundaries were developed to take account of the views of the Hydro-Electricity Commission concerning likely developments; there was Public expectation that the dedication of the reserve was permanent.
4. The wilderness area of South West Tasmania, of which Lake Pedder was the focal point, is outstanding, and is a national asset.
5. Lake Pedder was of significant international scientific interest and importance.
6. Lake Pedder was a place of outstanding beauty.
7. There has been a significant change in public and political attitudes to environmental issues since the decision to flood Lake Pedder was made by the Parliament of Tasmania in 1967.
8. There are practicable modifications to the present scheme which do not involve flooding Lake Pedder.
9. The case for retaining the present scheme unchanged rests basically on the cost of such modification.
10. The estimated costs of the modification which appears most acceptable would be of the order of $12 million in capital expenditures and a loss of $11 million representing the capitalised value of energy forgone from the Huon waters. If after a moratorium such modification were decided upon, these costs would be incurred from 1976 onwards.
11. The adoption of a five year moratorium period during which Lake Pedder would be at least temporarily restored by partly draining the Serpentine/Huon impoundment would be unlikely to prejudice the ability of the HEC to meet expected power demands. Even three years would probably be an adequate length for a moratorium.
Adoption of a moratorium may involve additional running of the Bell Bay thermal stations. We estimate the total cost of this extra running at a maximum of $8 million over the period from 1977 to about 1982.
This cost could be offset to some degree by the value of additional timber salvaged from the Gordon Valley.
12. There are precedents for Government expenditures such as these to yield benefits which are largely intangible.
13. There are national interests involved which would justify the Australian Government in meeting the costs involved in the moratorium or alternative scheme.
There are various uncertainties -the extent to which the lake would recover, and details of alternative schemes, in particular -which we believe preclude recommendation of a specific alternative at this stage. The moratorium proposal appears to provide a reasonably cheap way of resolving the various uncertainties.
In summary, bearing in mind the substance of our second Term of Reference, this Committee expresses the opinions that:
The loss of Lake Pedder was an adverse consequence of the Gordon River Power Development Stage 1.
The moratorium proposal would alleviate that adverse consequence.
The moratorium proposal should be adopted with a view to assessing the feasibility of restoring Lake Pedder.
The costs should be borne by the Australian Government.
John R. Burton
D.G. Hill
Edward St. John
W.D. Williams
