Basslink: No choice but to comply with Hydro Tasmania’s pricing instruction

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Basslink said Monday it has no choice but to comply with Hydro Tasmania’s instruction that some of its interconnector’s electricity-transmission capacity can only be used if pricing hits maximum levels.

Hydro Tasmania’s directive is controversial, and increases the chances of blackouts in Victoria over Australia’s summer months and higher prices, according to an article in the Australian Financial Review.

Basslink said the directive would have several adverse consequences, including reducing availability from the National Electricity Market (NEM), less competition on the NEM, which would impact both supply and prices, and affecting Tasmania’s energy security.

“The pricing instruction given by Hydro Tasmania is unnecessary as it is based on multiple assumptions, hypotheticals and disputed information,” Malcolm Eccles, CEO of Basslink, said in a statement, which Keppel Infrastructure Trust filing to SGX. Basslink is part of KIT’s portfolio.

“In Basslink’s opinion, the pricing instruction may result in a series of deviations to various compliance responsibilities and legal requirements of Hydro Tasmania,” Eccles said.

Basslink said the directive was based on a preliminary recommendation, received in July, from DNV GL to limit the interconnector’s capacity. The directive was part of an initial evaluation which hasn’t been validated, is based on assumptions and is still undergoing analysis by DNV GL, Basslink said.

Basslink added that it has given Hydro Tasmania an independent response from Cable Consulting International which expressed concerns on the reliability of the information DNV GL used and that the capacity restrictions were unnecessary.

“Despite these concerns, Hydro Tasmania has not provided Basslink with any further work or investigation conducted by DNV GL beyond the preliminary evaluation three months ago,” Basslink said.

Keppel Infrastructure Trust said in a separate statement that the development wasn’t expected to have a material impact on its net tangible assets per unit and distribution per unit for the current financial year.

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