Tasmanian Employer + TMEC Annual Conferences On Sale Now.

OPINION PIECE BY RAY MOSTOGL, CEO OF TMEC

The significance of this week’s joint announcement clarifying the funding arrangement for Marinus Link as well as Tasmanian augmentation projects to generate and transmit more electricity warrants recognition and praise on all the efforts of the Marinus Team, TasNetworks, Hydro Tasmania as well as State and Commonwealth governments.

While there is much to still do, it has substantially moved this project closer to being realised. Marinus will enable other projects to proceed which grows Tasmania’s source of wealth, reducing reliance on Commonwealth funding.

The funding announcement has de-risked and discounted the overall costs compared with a full commercial arrangement. Details are still to be provided and TMEC would prefer to see the future charges to consumers be described as a percentage above or below today’s charges instead of the description used in the media releases, consumers will be charged less than it could have been otherwise.

TMEC supports the state’s ability to export more electricity (in parallel to more on-island industrial loads) and the ability to import more renewable electricity during low rainfall / low wind which gives more energy security than exists today. This will be even more important when proposed additional industrial loads come online. It is insurance against the constraints with Basslink and the data capacity is enhanced with additional data cables being installed at the same time.

The unanswered question comes from what has happened over the last 10 years in Australia’s East Coast gas market. Gas consumers were subject to local costs up until LNG export hubs opened Australia to be one of the biggest gas exporters globally. Domestic consumers have since been subjected to international prices – which often have zero bearing to the cost of production. “Market forces” is the euphemism used.

How will Tasmania’s electricity consumers be treated when Tasmanian electricity price becomes a function of what it can be sold for to consumers other than Tasmanians? Market forces will value Tasmanian electricity relative to the national electricity market, domestic and international hydrogen products, and their derivatives. Will the east coast gas price hikes be replicated with Tasmanian electricity prices?

The price Tasmanian consumers pay should be linked to the cost of producing electricity not only what it can be sold for to the highest bidder who may have far more capacity to pass on its costs.

 

The price Tasmanian consumers pay should be linked to the cost of producing electricity not only what it can be sold for to the highest bidder who may have far more capacity to pass on its costs.

Ray Mostogl