Hydro Tasmania has referred negotiations on gas transmission over the Tasmanian gas pipeline to an arbitration.
The company has referred the matter between themselves and the owners of the Tasmanian Gas Pipeline for arbitration, in case an agreement cannot be reached before the current contracts expire.
Hydro Tasmania said it is determined to get a fair and reasonable arrangement for Tasmanians, and continues to negotiate in good faith.
The arbitration process and ongoing commercial negotiations will proceed concurrently.
The arbitration application has been lodged with the Australian Energy Regulator.
Hydro Tasmania said taking this step now gives wholesale gas customers certainty that new arrangements will be in place (whether by negotiated outcome or arbitration) before existing contracts expire.
Hydro Tasmania will keep engaging closely with wholesale gas customers to keep them updated on progress.
If required, the purpose of arbitration would be to create the sort of outcome you’d expect in a market where ‘workable competition’ exists.
Current gas market reforms were initiated by the COAG Energy Council, after an ACCC report found an imbalance in the bargaining power of pipeline operators and shippers.
The Gas Market Reform Group, headed by Dr Michael Vertigan, has recommended steps to strengthen the bargaining power of shippers.
Having applied for arbitration, Hydro Tasmania is constrained in its ability to provide further commentary or interview on these matters.
Neither ongoing negotiations, nor a potential arbitration process, affect Tasmania’s energy security or security of gas supply.
Current gas market reforms allow an arbitrator to make an interim determination to ensure continuity of supply.