Tasmanian industrials worried about gas price negotiations

The state government is prepared to force Hydro Tasmania and the Tasmanian Gas Pipeline (TGP) company into arbitration if it cannot resolve differences over current gas contracts.

The two companies have been negotiating new gas contracts for the past two years with the current arrangement to expire by the end of the year.

This comes as analysts predict businesses and households nationwide will need to contend with rocketing gas price rises over the next 18 months.

Hydro Tasmania met with TGP in December 2015 to advise the company that it would not be using the pipeline beyond December 2017 due to a planned sale of the Tamar Valley Power Station.

This decision was reversed and negotiations recommenced the following April when the state in the throes of an energy crisis.

TGP told the state’s recent energy inquiry that if an agreement was not reached, gas prices for industrial customers would increase by 110 per cent.

Tasmanian Minerals and Energy Council chief executive Wayne Bould said the state’s industrial businesses needed gas prices kept competitive so they could remain competitive on the international market.

He said most businesses were on short-term contracts that would expire within 12 to 18 months; facing uncertainty beyond then. 

“This is narrowing to quite a critical pinch-point,” Mr Bould said.

A Hydro spokesman said that discussions were ongoing. 

“We’re negotiating to get the best outcome for Tasmania, in order to reach commercial arrangements in Tasmania’s best interests.”

Energy Minister Matthew Groom said last month that the government had made it clear to both parties that “timing is of the essence”.

“Our expectation that they engage in good faith commercial negations to secure a fair outcome as soon as possible,” he said. “In the event that we do not see this issue resolved soon the government will pursue moves to force those negotiations to an arbitrated outcome.”