Australia's biggest hydro-electric scheme, Snowy Hydro, is struggling to stay competitive and is ripe for a takeover by corporate ''energy giants'', according to a United States embassy report posted online by WikiLeaks.
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The report says Snowy Hydro officials ''are pessimistic about the independent future of the scheme, despite efforts to diversify their fuel supply.''
Snowy Hydro spokesman Paul Johnson confirmed staff from the US embassy in Canberra met company executives in 2009 as part of ''a regional tour by an American agricultural delegation''.
''As for any of the comments they've made in this document, that's their interpretation of the meeting that took place. You only have to look at our annual report to see we're in a good position financially,'' Mr Johnson said.
The company's 2010-11 annual report shows Snowy Hydro doubled its net profit, earning $459.6million last financial year, up from $266.9million the previous year.
It paid government shareholders a $220million dividend - up from $90million - with 58per cent going to NSW, and the remainder to the Victorian and Federal governments.
The embassy report, sent to the US department of energy in Washington DC in April 2009, estimates Snowy Hydro needs $100million to upgrade infrastructure in order to remain viable.
These include a network of seven power stations, 31 generating units, 16 dams and more than 200km of tunnels and aqueducts.
According to the five-page document, headlined ''Snowy River Hydro Scheme in Trouble'', the company's chief executive David Harris told embassy staff ''he could easily see Snowy being bought out by one of the larger utilities sometime in the next decade as it struggled to meet environmental and market demands.''
''Although the implementation of a carbon trading scheme would make Snowy's product more competitive, the low initial carbon price, and likely compensation to coal-fired power generators, would not significantly alter the economic realities for the company,'' the report said.
The report, classified as ''sensitive'', also noted former Prime Minister Kevin Rudd described the Snowy scheme as an example of ''the glory age of nation building'', but adds this was ''a rhetorical device [used] to sell his new $43billion government broadband network.''
The leaked cable concludes the Snowy's overall competitiveness ''is not going to improve and it is increasingly vulnerable to a takeover.''
Climate change will also undermine the scheme's ability to act as a competitive ''hedging product'', able to supply large scale electricity generation to other energy providers at short notice.
''Whether a Snowy scheme operated by a 'normal' Australian energy giant like AGL or Origin would be seen as a failure is unknown, but the myth of the Snowy as a producer of clean energy for Australia's growth would be busted permanently,'' the report said.
