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Energy and Emissions Reduction - Basslink

Dr Rosalie Woodruff MP

Dr Rosalie Woodruff MP  -  Thursday, 9 September 2021

Tags: Basslink, State Budget

Dr WOODRUFF - I understand that the current owners of Basslink Keppel Infrastructure Trust are in financial trouble and have failed to pay compensation money that is owed to Tasmania for the damage that occurred during the energy crisis in 2015-16. An infrastructure investor, APA Group is in confidential, exclusive and incomplete discussions with Keppel to potentially acquire Basslink Limited. Are you comfortable with the idea of a company whose portfolios are almost exclusively made up of fossil fuel investments supporting gas pipelines owning our connection to the mainland?

Mr BARNETT - The Government recognises that Basslink is privately owned and that is a matter for them. APA is a most credible entity operating in the electricity market with respect to the transmission systems across Australia. I am happy for Sean Terry to add to that in terms of APA's credibility and role in the electricity market across Australia.

Mr TERRY - APA has a broad portfolio energy interest. It is true they have gas pipelines but they also own two regulated transmission links, Murray Link and Direct Link. They were originally merger links just like Basslink I and went through that conversion process to a regulated link. They are also looking at renewable energy development opportunities. Without putting words in APA's mouth, I think they are looking to diversify out of their gas networks because there is a whole debate around decarbonisation of the gas sector. They do have gas pipelines but they do also have other diversified electricity assets and energy assets.

Dr WOODRUFF - Basslink is privately owned and it has been an absolute financial disaster for Tasmanians. While it's provided us with that transmission line connection with the mainland that is very important, the cost to Tasmanians has been hundreds of millions of dollars in debt. I understand that there is an option to extend the Basslink contract from 10 to 15 years. Potential buyers would want to know if it is going to be extended and what are the financial implications for Tasmanian taxpayers? What would the implications be for the Marinus Link if it was extended?

Mr BARNETT - Matters regarding Basslink are clearly a commercial-in-confidence. The Government can't discuss those sorts of matters.

Dr WOODRUFF - Is Basslink going to last for 15 years?

Mr BARNETT - We can't discuss matters that are commercial-in-confidence.

Dr WOODRUFF - Why should Tasmanians take it on faith? It's cost hundreds of millions of dollars. There's a question mark about whether it is going to survive. The idea of extending the contract for another five years when there's huge problems with its lifetime damage because of the energy crisis is a matter of public fact. So, why aren't you telling Tasmanians whether you're going to extend the contract another five years?

Mr BARNETT - This is an agreement between Basslink, which is a private entity, which I think you've acknowledged, and Hydro Tasmania. Of course, we have a special interest in it -

Dr WOODRUFF - I would hope on behalf of Tasmanians you're keeping an eye on hundreds of millions of dollars.

Mr BARNETT - It's a Hydro Tasmania arrangement with Basslink and KIT, a private entity. That's a matter for scrutiny with Hydro Tasmania in a few months' time. I'm sure Hydro Tasmania could respond to those queries to the best of their ability, subject to matters that are commercial-in-confidence.

Dr WOODRUFF - Minister, how does the Bass Link Hydro Tasmania contract and the Marinus Link TasNetworks concept fit together? I'm wondering if the Basslink contract is extended beyond 2031, how does that impact upon the hypothesised business case for Marinus and does it undermine it?

Mr BARNETT - Thanks for the question. Sean?

Mr TERRY - Marinus has been progressed on a regulated basis whereas Basslink is a merchant link. You are right; there is a contract between Hydro Tasmania and Basslink. The business case for Marinus stands alone so that will go through the regulatory investment test. I think the issue will be more around once-on-island generation, like extra wind, how is that dispatched over Basslink or Marinus. And I don't have the answer to that question here today. It's probably the best one for Hydro. That would work.

Dr WOODRUFF - There are concerns that it might undermine it if was a crossover.

Mr BARNETT - To assist the member, I think the bottom line is that we'll need both. We have big plans to go from 100 per cent to 200 per cent - 150 by 2030 - so with that legislated we have every intention of growing our renewable energy credentials and our capacity in Tasmania. That's part of our plan. We will absolutely need both.

Dr WOODRUFF - If Basslink's only has another 10 to 15 years of life in it, what's the plan for a second Basslink?

Mr BARNETT - I can't speak for Hydro Tasmania. It has an agreement with Basslink. Those discussions and arrangements regarding the commercial arrangements are obviously commercial-in-confidence. Best put those sorts of questions to Hydro Tasmania.

Dr WOODRUFF - Yes, I accept that. But because you're saying that 'we have plans for the future; we have big plans, we have a 200 per cent renewable energy target', it's a very important question. Where's the planning for that?

Mr BARNETT - We can assist.

Mr TERRY - The useful life of Basslink extends well beyond the current contract so the issue about how its paid for past that contract is really a matter for the owner of the asset. But there's another agreement that the state has called the Basslink Operating Agreement. It has a 40-year lifespan. You are quite right. The BSA called the Basslink Services Agreement will expire but the asset itself doesn't expire at the end of that agreement. It will have a much longer useful life. How that cost is recovered beyond that contract will be a matter for the owner of the asset.

Dr WOODRUFF - So it could change the price for importing and exporting over that infrastructure at that point. We wouldn't be having a contract with the owner at that point. Is that what you're saying? We wouldn't have a maintenance and upgrade -

Mr TERRY - I don't want to speak for Hydro. There's an option to extend -.

Dr WOODRUFF - No, but the state would be finished. It's the maintenance that's ongoing.