Snowy Hydro executives received $1.2m in bonuses as Snowy 2.0 costs spiral

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Snowy Hydro executives were awarded more than $1.2 million in performance-related bonuses for the last financial year, even as the cost of the company's flagship Snowy 2.0 hydroelectric project continued to spiral, according to reporting by ABC Australia.

The bonuses were disclosed in the company's annual report and confirmed by multiple sources. Chief executive Dennis Barnes received $323,000 in bonus pay on top of his $1.69 million salary, while four other senior executives received a combined $919,000 in "variable pay," as reported by ABC News.

The payments come amid ongoing cost overruns and delays for Snowy 2.0, a project that was originally budgeted at $2 billion when announced in 2017 but is now expected to cost at least $12 billion, with officials acknowledging the final figure will be higher.

Coverage comparison

Coverage of the bonus payments and project troubles was led by ABC Australia, which published at least two related reports. The first focused on the executive bonuses, highlighting the criticism from Shadow Energy Minister Dan Tehan and the timing of the payments — they were awarded in September, a month before Snowy Hydro confirmed further cost increases.

The second report took a broader look at the project's status, noting that tunnel boring machines had completed a key section of the underground tunnel network, but that the project remains seven years behind schedule and has faced safety incidents, including a tunnel collapse and a toxic gas leak. That report also noted that expert opinions are divided on whether the project will ever pay for itself.

Both reports drew on official statements from Snowy Hydro, government ministers, and opposition figures. No other outlets' coverage was provided for comparison, so this article relies on the details as reported by ABC.

Key claims

The central facts, as reported by ABC, include:

• Executive bonuses: Snowy Hydro's CEO Dennis Barnes received $323,000 in bonus pay on top of his $1.69 million salary in the last financial year. Four other senior executives received approximately $919,000 in "variable pay," bringing the total to more than $1.2 million.
• Bonus conditions: According to ABC, a third of executive bonuses were contingent on the performance of Snowy 2.0 and other projects, yet the bonuses were awarded based on customer satisfaction, safety, and work culture targets, despite missing financial and project targets.
• Cost blowout: The Snowy 2.0 project's initial budget of $2 billion has blown out to $12 billion, according to Snowy Hydro's most recent costings. This represents an increase of roughly $3 million per day over the project's life. The company has admitted the final cost will be higher, but has not disclosed the exact amount, saying it is still under review.
• Project delays: The project is seven years behind schedule. Completion is now expected by the end of 2028, five years later than originally planned. The government is expediting funding to meet this timeline.
• Safety incidents: Tunnel boring machines have faced setbacks, including a tunnel collapse and a toxic gas leak, as reported by ABC.
• Political criticism: Shadow Energy Minister Dan Tehan called the management of the project "a debacle" and said the bonuses "do not pass the pub test." He accused the government of mismanaging the project and enabling cost overruns.

Perspectives

Government and Snowy Hydro's position: Finance Minister Katy Gallagher said that executive remuneration at Snowy Hydro is set independently of government. A Snowy Hydro spokesperson defended the bonuses, saying the company has a broader remit than just Snowy 2.0, noting it is Australia's third-largest generator and fourth-largest retailer. CEO Dennis Barnes acknowledged the project's cost increases but attributed them to the unprecedented scale and complexity of the project, saying that such increases are common in mega-projects globally.

Opposition's view: Shadow Energy Minister Dan Tehan criticized the bonuses as inappropriate given the project's performance, linking the cost overruns to changes in contracts and accusing the government of poor management. He argued that the bonuses should not have been paid while the project continues to blow out.

Expert opinion: The ABC report noted that experts are divided on whether the project will ever pay for itself. Some highlight the project's strategic importance for energy security and renewable storage, while others question its economic viability given the massive cost escalation.

Timeline context: The Snowy 2.0 project was announced in 2017 by then-Prime Minister Malcolm Turnbull. The original Snowy Mountains scheme, completed in 1974, cost $820 million at the time, equivalent to more than $8.5 billion today when adjusted for inflation. The project's completion date has already been extended to 2028, with the government expediting funding.

Correction/Clarification: While the bonuses were paid for performance in the last financial year, they were awarded in September 2023, a month before Snowy Hydro formally announced that the project would exceed its already-increased budget. This timing has been cited by critics as evidence of misalignment between executive incentives and project outcomes.