Advanced Search

Share Coverage



Category: Business, Economics and Finance / Industry / Electricity Energy and Utilities

Gas supply uncertainty hits Tasmanian industrial sector

Tuesday, 23 Aug 2016 04:39:21 | Richard Baines

Hydro Tasmania is under pressure to commit to a long-term gas contract. (ABC)

There are fears Tasmania's big industrial users will struggle to remain viable if a long-term gas contract is not secured.

Hydro Tasmania's gas contract expires in 2017 and it remains unclear whether it will recommit.

If Hydro does not sign on again, gas prices for other users will skyrocket with some estimates it could be by as much as 20 per cent.

The head of the Minerals and Energy Council, Wayne Bould, said it would mean some industrial users may have to make the costly switch to electricity, threatening their viability.

"If you're converting from gas to electricity, for example, it's not as simple as throwing out the gas heater and going to Bunnings to buy a new electric heater," he said.

"There are some that may and there are some that would find it extremely difficult, and that's because they're pricing their output into international markets that are fluctuating at the moment," he said.

Mr Bould said it would be more cost-efficient for the State Government if a gas deal was negotiated soon.

He said if a deal was not struck and the cost was worn by the industrial users it could lead to a request for taxpayer assistance.

"It's highly likely that the cost of supporting those businesses, from a government sense, would be greater than or equal to the amount of money that would be spent on securing a transmission contract for a long period of time," he said.

While the current gas contract does not expire until next year, Mr Bould said his members needed security soon.

"To leave it at this late date — until you're so close to 2017 — to make that decision puts a large imposition on those businesses," he said.

Tasmanian gas has 'structural issues'

The topic of soaring gas prices has been discussed nationally lately and was raised at the recent COAG Energy Council meeting.

Tasmania's Energy Minister Matthew Groom said an agreement was reached for a national plan that would include increasing gas supply and subsequently push prices down.

"This reform package aligns with the Tasmanian gas market report recommendations regarding market framework and cost structures," he said

More than 10 years since the Labor state government pledged to connect 100,000 homes to natural gas, just 12,000 customers of a possible 43,000 are signed up.

Millions of taxpayer dollars have been spent over the years on the project, and a report released yesterday suggested again using incentives to encourage connection.

Mr Groom hinted at problems with the approach taken.

"There are also Tasmanian structural issues that are a legacy of how gas was first rolled out in Tasmania," he said.

The Government's newly formed Energy Security Taskforce will examine the role of gas as part of the response to this year's energy crisis.

AustraliaPlus


 

Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend