Energy experts have indicated Tasmania’s energy crisis could cost the state more than $400 million, according to a report in the Financial Review.
Tasmania’s wholesale electricity price has been around $250/MWh since its lifeline to the mainline – the Basslink high-voltage interconnector – was cut in December.
According to the Financial Review, this figure is approximately five times what the state was paying for wholesale electricity before the outage when it was importing large quantities of electricity from Victoria’s low-cost brown coal generators via Basslink.
Basslink’s outage coincided with a severe drought that had already begun to deplete Tasmania’s dams – its main source of baseload electricity apart from Basslink – compounding the crisis.
Much of the bill will be footed by Hydro Tasmania, other state-owned energy companies and the state government, the report said.
Manufacturers such as Rio Tinto’s Bell Bay Aluminium are having to reduce their electricity consumption to avert blackouts and pay more for the energy they consume – costing sales and putting hundreds of jobs at risk. South32’s Tasmanian Electro Metallurgical Company (TEMCO), Norske Skog and Nyrstar’s zinc smelter have also been asked to cut their power use.
The Financial Review says sources close to the government believe the cost to Hydro itself is less than $200 million by a wide margin, most of which can be covered by new borrowing. The Tasmanian Audit Office, however, had expressed concern at Hydro’s shrinking cashflow even before the Basslink outage.
Last month, Basslink’s Singaporean owners said it wouldn’t be back in service until mid-June – the fourth time the deadline has been extended, the report said. This means Tasmania will have paid the current sky-high prices for six months, raising the estimated extra cost of electricity to approximately $430 million.