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Musselroe Bay wind farm in the state’s north-east.

Tasmania will have the lowest regulated power prices in the country within five years as the government flicks the switch on a new Tasmania First Policy.

New Energy Minister Guy Barnett has bitten the bullet and announced the new measure to ensure power costs for business and consumers is kept under control.

The announcement comes on the back of earlier decisions resulting in a five per cent cap on power prices for consumers, a $20 million fund to rebate small and medium business and return some $20 million in Hydro profits to pensioners.

Overall the value of the Tasmanian Market Intervention in caps and rebates is more than $120 million.

The Tasmania First Policy aims to make energy a competitive advantage for the state – the Government wants the low-cost, secure supply of energy in Tasmania, to not just be a hallmark, but a reason for business to feel confident and to expand, Mr Barnett said.

“We are also looking to business to relocate to Tasmania and tap into the potential that a Tasmania First Energy policy will unlock,” Mr Barnett said.

“Tasmania First means two things – cheaper power and secure power.

“The best thing we can do to bolster energy security is make sure we have enough in our dams as we have today.

“Secondly, we are supporting more generation in Tasmania. Wind farms at Cattle Hill and Granville Harbour have been given the go-ahead and construction will start as soon as possible.”

The Government has grabbed the opportunity to work with the Federal Government on a long-term project, Battery of the Nation, that aims to double Tasmania’s generating capacity.

But the main component of the Tasmania First policy is a smart, competitive approach to manage power prices.

The target is to have the lowest regulated power prices in Australia by 2022 and the signs are already positive.

Mr Barnett said that more could and should be done including review the regulated power prices linked into Victoria and move away from a flawed agreement – which without government intervention via rebates and price capping, would have seen the continuation of a 65 per cent increase in power prices.

Tasmania joined the National Electricity Market in 2005 under the Bacon Government and a year before the completion of the Basslink cable which physically connected Tasmania to the NEM in 2006.

The NEM comprises all states and territories, except WA and the Northern Territory. The Australian Energy Market Commission and the Australian Energy Regulator are responsible for overseeing and regulating the NEM.

“Effectively, when Victorian power generators sneezed, Tasmanian power customers caught a cold leading to a 65 per cent increase in power prices,” Mr Barnett said.

“That’s not sustainable which is why we are looking at options to change the way prices are set,” he said.

This will mean fairer, more affordable prices … and will make a massive difference to households and small business.”