A long-running disagreement between Hydro Tasmania and Tasmanian Gas Pipeline (TGP) over transport costs and access has been referred to arbitration.
The arbitration process will be the first case to test Australia’s new energy pipeline arbitration system, set up following an independent review from Dr Michael Vertigan on the regulation of gas pipelines.
The dispute, which has been running for several years, came to a head in July when TGP accused Hydro Tasmania of refusing to accept a 45 per cent discount on existing tariffs, which TGP said would mean a 95 per cent increase in charges for major industrial customers in Tasmania.
TGP accused Hydro Tasmania of compromising energy security in Tasmania.
However, on Monday, Hydro Tasmania referred the matter to the Australian Energy Regulator for arbitration in case an agreement could not be reached before the current contract expires at the end of 2017.
The 736 km TGP was commissioned in 2002, and is a subsea and onshore gas pipeline system that transports Gippsland Basin gas to Tasmania.
Gas is supplied to the TGP at Longford in Victoria by local gas producers and through the VicHub facility.
The pipeline also supplies the Tamar Valley Power Station.
TGP is owned by Palisade Investment Partners.