Negotiating for Tasmania

6 July 2017

Hydro Tasmania fully understands that Tasmanian Gas Pipeline Pty Ltd (TGP) wants to extract the best possible return from its Tasmanian investment, through Hydro Tasmania.

“We’re determined to get a fair and reasonable arrangement for Tasmanians. We’ve received various offers from TGP and made counter-offers,” Mr Davy said.

“None of those offers genuinely constitute a ‘45 per cent discount’ on the current agreement.

“We have not yet received an offer from TGP that we consider fair and reasonable for Tasmanians.

“We’d be failing Tasmanians if we accepted an arrangement that’s not reasonable or suitable for Tasmania. That includes accepting any arrangement that locks in Tasmania for too long a period at too high a price.

“In particular, we’re seeking an arrangement that avoids any cost increases for Tasmanian gas transmission customers beyond CPI.

“While negotiations continue, we’ve made a constructive proposal to extend the current arrangements until the end of 2018, and therefore provide ongoing stability.

“We’ve invited TGP to continue good-faith negotiations. We’re keen to reach a commercial arrangement by negotiation if possible,” he said.

Tasmania would not lose access to the gas pipeline if an arbitration process was required and continued into next year. Current gas market reforms are intended to allow the arbitrator to require the continuation of current arrangements, or similar, until arbitration is completed.

It’s therefore not accurate to portray protracted negotiations as a threat to energy security.

Hydro Tasmania storages stood at 34.7 per cent at the start of the week, which is a very secure level for this time of year, with or without gas-fired generation.

We comfortably exceeded our storage target of 30 per cent at the end of June. We are entering what is usually the wettest time of the year. 

The Combined Cycle Gas Turbine at the Tamar Valley Power Station is not operating, and has not operated since 11 June. It can be re-started at short notice. The smaller open-cycle units have been running for short periods in response to high market prices in Victoria.

Ends.

Released for Hydro Tasmania by Rowan Dix, (03) 62305330 / 0409 722359 / media@hydro.com.au.