The federal, NSW and Victorian governments have pulled hundreds of millions of dollars more out of Snowy Hydro than it earned in profits, forcing it into debt to fund the payout.
In the year to June, the owners of the scheme paid themselves $460 million in dividends, nearly twice the $240 million they were paid the year before.
The NSW government banked the bulk of the dividend, since it has a 58 per cent holding in the company, with the Victorian government taking 29 per cent and the federal government the remaining 13 per cent.
The large increase in the dividend occurred even though profit after tax in the year to June rose to just $280.6 million from $259.2 million a year earlier.
This was after booking losses on hedging contracts of $56.6 million.
Without this accounting adjustment, the profit would have been $319.8 million. The profit in the prior year was boosted by gains of $74.9 million on hedging contracts.
High levels of water storage positioned the group to profit, allowing it to take advantage of price surges in wholesale electricity markets.
Snowy Hydro is effectively an "insurer" to others in the power sector, stepping in to provide electricity when asked to do so.
Price spikes, meeting "insurance contracts" held to supply electricity retailers and other generators at times of high prices or supply difficulties elsewhere in the market, and improvements in water inflows and storage levels at the Snowy Hydro scheme were all positive influences on earnings in the year, a spokesman said.
Electricity generated from the scheme's hydro units surged to 5142 gigawatt hours, significantly ahead of the 3186 gigawatt hours generated a year earlier.
Output from its two gas-fired peaking power stations in Victoria - Laverton and the Latrobe Valley - rose slightly to 27 gigawatt hours from 24 gigawatt hours, due to sluggish market conditions.
The group continued to expand retail sales via its Red Energy brand, with customer numbers rising to 336,000 from 310,000, mostly in Victoria.
The former head of Infrastructure NSW, Paul Broad, was recently appointed chief executive of Snowy Hydro.
He has worked previously in the electricity industry.