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Category: Electricity Energy and Utilities / States and Territories

Mothballing of Tamar Valley Power Station a 'failure in risk management'

Thursday, 4 Aug 2016 09:17:36

The Minerals Council says it heard about the station's mothballing via the media.

A Tasmanian Government decision to decommission the Tamar Valley Power Station has been described as a failure in risk management.

The criticism has come from a Tasmanian gas pipelines company during a parliamentary inquiry into the circumstances surrounding the state's energy crisis.

Tasmania was forced to import diesel generators at the height of the crisis after a prolonged outage of the Basslink power cable coincided with record lows in Hydro Tasmania's dams.

Lindsay Ward from Palisade Asset Management described the power station decommissioning as "courageous".

"I think if you do a simple internet search on undersea cable failures, I think in the last seven years there have been six cable failures so they're a known event.

"I think that is a failure in risk management in my view. Tamar Valley was a very cheap insurance product."

Mr Ward told the inquiry the contract to supply the power station with gas was due to run out next year and negotiations with Hydro Tasmania had been ongoing since 2013.

He said a viable contract was rejected by Hydro Tasmania.

"At the time we found it difficult to understand why and the thinking behind it," he told the inquiry.

Mr Ward said he later learnt of plans to dismantle the power station.

Gas viability under threat

A contract to supply the Tamar Valley Power Station underpins the gas pipeline being extended around the state, and to major industrial users.

Mr Ward said if government support for gas does not exist, the very viability of gas to Bridgewater, Hobart and to Grange Resources was "under threat".

"If we are unable to reach a satisfactory outcome with Hydro, then the impact is quite significant on the major industrial users," he said.

"We are looking at increases in the order of 110 per cent."

Major industry not consulted

Tasmanian energy inquiry witnesses Photo: Ray Mostogl says Bell Bay will not return to full production until the end of August. (ABC News)

Major energy users in Tasmania criticised the decommissioning without consulting with industry.

The Tasmanian Minerals and Energy Council also appeared before the inquiry.

Council president Ray Mostogl, who is also chief executive of Bell Bay Aluminium, said despite it being a risk to business, he only found out about the mothballing decision by reading about it in newspapers.

Mr Mostogl said the energy crisis was still having an impact on the Bell Bay smelter.

"The dams are full, Basslink is back in but we are not back to full production," he said.

He said the energy crisis was "new territory" for his business and full production might not resume until the end of the month.

Alarm over energy asset use

Mr Mostogl questioned whether the state's energy assets were being used to generate cash or drive the economy.

He said he was alarmed by the decisions and messages surrounding the state's energy assets, saying they had been "floundering for the last six years".

He welcomed the current government's energy strategy but said it was yet to be delivered.

The Mineral Council's chief executive Wayne Bold told the inquiry it was up to individual businesses to decide whether to pursue compensation from the Government or Hydro in the wake of the crisis.

AustraliaPlus


 

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