THE imminent introduction of a carbon tax has prompted the country’s largest electricity generator, Macquarie Generation, to slash hundreds of millions of dollars off its balance sheet as it prepares for future profits to be wiped out.
The state-owned power generator has cut its asset values by more than a third, from more than $1.8 billion to $1.1 billion, by booking a $700 million writeoff, the first big financial hit as a result of the looming carbon tax.
If similarly sized writeoffs are taken at the other two NSW government-owned generators, Delta Electricity and Eraring Energy, this would wipe another $1 billion off the value of government-owned assets due to the federal government’s new tax.
It is unclear if the Macquarie Generation writeoff will trigger any loan covenants or guarantees although, as a government-owned entity, this is considered unlikely.
As the largest single emitter of carbon dioxide in the country, Macquarie Generation faces a direct annual tax of $460 million, which will flow into the federal government’s coffers, if it maintains electricity output at present levels.
The company has indicated that it may buy some of electricity from the wholesale market if it decides this could help improve its bottom line after the implementation of the carbon tax.