New umpire may rule on gas standoff

A TASMANIAN standoff over gas transmission charges could become the first in Australia to be arbitrated under a new system set up by the Council of Australian Governments.

The arbitration system is expected to be in place by August 1, Energy Minister Matthew Groom said.

Hydro Tasmania and Tasmanian Gas Pipeline (TGP) have been negotiating gas transmission charges for undersea gas and land-based pipelines to Port Latta and Bridgewater for several years.

Last month, TGP suggested a 95 per cent increase in gas transmission charges for major industrial users such as Bell Bay Aluminium, Grange Resources and TEMCO.

Hydro Tasmania chief executive Steve Davy said Hydro had continued to negotiate in good faith.

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

“The purpose of arbitration would be to create the sort of outcome you’d expect in a market where ‘ workable com- petition’ exists. We’re determined to get a fair and reasonable arrangement for Tasmanians.”

Tasmanian Minerals and Energy Council chief executive Wayne Bould said major industrials would not be rushing to arbitration, but would try for a win-win with their supplier.

“The new system provides an ultimate mechanism with an arbitrator and an independent view of the issues that hasn’t been available before,” he said. “That is pretty important if they get to a point where the negotiation is not working and there is no give and take.”

The arbitration system was conceived by former Tasmanian Michael Vertigan as the chairman of the Gas Market Reform Group, after an ACCC report last year found “the majority of transmission pipelines on the east coast are using their market power to engage in monopoly pricing”.

TGP, a subsidiary of Pali- sade Investments, made a $20 million profit from $48 million in revenue in 2016.

Dr Vertigan’s report said Tasmanian stakeholders had raised concerns about price increases on the TGP, despite it facing declining volumes and having significant spare capacity available.

Under the arbitration system, a dispute notice must be lodged and an arbiter must make a decision within 50 business days, or 90 days if agreed to by both parties.

Access to the pipeline would be maintained beyond the expiry of current contracts during arbitration.

The Mercury sought comment from TGP.

Labor’s energy spokesman Scott Bacon said the Energy Minister had failed to provide certainty on gas contracts for Tasmania’s biggest employers like Bell Bay Aluminium and TEMCO.

He said an interim energy security taskforce report said the contracts should have been agreed to by March and finalised by June.

He called for the government to release the report.

A Bell Bay Aluminium spokeswoman said negotiations with TGP had begun.