Hydro Tasmania commences gas arbitration process


Negotiations between Hydro Tasmania and the owners of the Tasmanian Gas Pipeline (TGP) over future access arrangements have progressed.

Hydro Tasmania has referred the matter for arbitration, in case an agreement cannot be reached before the current contracts expire.

“Hydro Tasmania is determined to get a fair and reasonable arrangement for Tasmanians, and continues to negotiate in good faith,” Hydro Tasmania said in a statement.

“Ongoing commercial negotiations and the arbitration process can proceed concurrently. The arbitration application has been lodged with the Australian Energy Regulator.

“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.

“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.

“This important step gives wholesale gas customers assurance that either a negotiated outcome or arbitration arrangements will be in place to ensure continuity of supply prior to the expiry of existing contracts,” Tasmanian Minister for Energy Guy Barnett said.

“Commencing the arbitration process does not rule out a negotiated outcome between Hydro Tasmania and TGP.

“However, commencing arbitration now preserves Hydro Tasmania’s ability to use the process to secure an outcome which is in the best interests of Tasmania, including wholesale gas customers.

“The government understands Hydro Tasmania will continue to engage closely with wholesale gas customers to ensure they are informed of progress and further discussion will occur with these customers this week to provide more information.”