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Tasmania's major industrial users are facing gas price rises of up to 95 per cent, potentially putting hundreds of jobs on the line.
Hydro Tasmania has a "take or pay" agreement with the Tasmanian Gas Pipeline (TGP) to import from Victoria across Bass Strait that expires at the end of the year.
TGP said it was unable to agree to terms with Hydro Tasmania for a gas supply contract for its Tamar Valley Power Station (TVPS), under which gas is supplied and priced to major Tasmanian industrial users.
The two parties have been negotiating unsuccessfully for months, prompting concerns from the big power users they will be hit with significant price rises.
The owners of the pipeline have written to the major industrials to inform them prices will skyrocket by nearly 100 per cent.
It will be a difficult for the industrials — which employ thousands of people — to absorb such a huge price rise.
In statement released today, TGP said it had informed major industrial customers in Tasmania prices would rise up to 95 per cent after negotiations with Hydro Tasmania proved "fruitless".
"The decision to offer pricing to major industrial gas users comes in the wake of fruitless discussions with Hydro Tasmania over some two years to determine a fair pricing mechanism for the transport of gas to Tasmania," the statement said.
"As a consequence, [there will be] significant increases of up to 95 per cent in the charges to major industrial customers."
TGP said Hydro Tasmania represented about 75 per cent of its revenue for gas transportation to Tasmania and "effectively sets the price for all gas users in Tasmania".
"By not responding to being offered a 45 per cent discount on the previous agreement with TGP for TVPS, Hydro Tasmania is effectively compromising energy security in Tasmania."
TPG said if the offer to Hydro Tasmania had been accepted, the increases to major industrials would have been "minimal".
Concern for small business and residents: Minerals Council
The Minerals and Energy Council's Wayne Bould said the negotiations had been of concern to major industrials but there could be consequences for small businesses and residents.
"Ultimately the businesses have the highest potential risk, certainly it affects mums and dads and small businesses and anyone else in the game," he said.
"Certainly mums and dads may be a little bit more flexible, but if they are going to be hit by 95 per cent increases the same as the larger businesses, then it's got to be a concern for everybody."
Mr Bould said he doubted the big industrials could absorb the increases.
"We haven't seen much movement in the commodity price, in an upward sense in the last 12 months or so," he said.
And Mr Bould said it was possible jobs were at risk.
"Ultimately it could [be the case as] an increase in risk for a business puts jobs and investment decisions, and capital decisions and expansion decisions — and all of those things — at risk," he said.
Energy Minister labels job loss fears as 'baseless'
Energy Minister Matthew Groom said in a statement he wanted to "secure the best possible gas transportation arrangements for Tasmania".
"We continue to encourage all parties to negotiate in good faith and secure fair outcomes," he said.
"We stand in support of the major industrials on this issue and will continue to do everything we can in partnership with them to ensure Tasmania's interests are fully protected.
"The suggestion of major job losses is completely baseless."
Treasurer Peter Gutwein would not be drawn on the commercial negotiations when asked today.
"That's a commercial negotiation between Hydro and the Tasmanian Gas Pipeline, and I won't be commenting on that," Mr Gutwein said.
"There is a process we are working through.
"Obviously we want the best deal for Tasmanian gas customers."
Topics: electricity-energy-and-utilities, business-economics-and-finance, hydro-energy, tas
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