Snowy 2.0 bonuses dumped amid $12bn cost blow out

Snowy Hydro chief executive Dennis Barnes has revealed the board will not pay millions in dollars in bonuses to top executives this year, after mega pumped hydro’s cost blew out to $12bn.

Snowy Hydro chief executive Dennis Barnes.

Top executives at Snowy Hydro will miss out on millions of dollars in bonuses this year after costs blew out to $12bn.

Chief executive Dennis Barnes on Friday also conceded there were “no guarantees” that the project’s price would not blow out further.

“Any bonuses associated with the projects, the board have ­determined will be zeroed out,” he told the ABC. “We won’t be getting any bonuses associated with the project.”

The Australian in July ­revealed bonuses for senior ­executives were being scrutinised by the board following the death of contractor Alan ­Machon in a single-vehicle crash near Cooma in April.

Nine executives has stood to share a bonus pool of up to $4.5m – 40 per cent of the executive team’s total remuneration. It is understood some bonuses associated with smaller projects may be paid to Snowy Hydro executives, with a final decision to be revealed in the company’s October annual report.

It comes after Energy and Climate Change Minister Chris Bowen confirmed taxpayers would be on the hook for $6bn more than previously thought as part of a project “reset” released on Thursday.

Snowy Hydro revealed the project would be 10 per cent ­larger than previously flagged and operational a year earlier than scheduled, a boost to the country’s energy transition as Australia lags in developing firmed storage.

Mr Barnes earlier this year said the project might not be ­operational until 2029, but this time frame has since been ­revised. First power is now ­expected in 2027 before being commercially operational in ­December 2028.

The project, originally anticipated to cost $2bn, has been dogged by issues including the collapse of one of its major contractors, Covid delays and more recently a major tunnel boring machine getting stuck.

Mr Barnes on Friday said management had identified four major factors that had contributed to cost blowouts: inflation, soaring shipping costs, poor planning in the early stages, and the boring machine getting bogged in soft earth.

He defended the ballooning costs, and argued the project was a valuable investment for the taxpayer. The updated cost, however, does not include the price of transmission lines ­required to connect the pumped hydro project to the grid.

“We have paid $2bn in dividends in the last 10 years and $1bn in tax so the way the energy transition has played out … the project has actually gotten more valuable,” Mr Barnes said. “We are obviously very disappointed in the cost ­increase and of course we apologise for that, but bear in mind this is an investment for the Australian taxpayer.”

Mr Bowen said the project was critical for the nation in reaching its ­renewable energy targets and deliver on its energy needs, arguing it would be a “huge waste” of money to ­cancel it. He said the new estimates were “conservative” and that he had no reason to question them.