Tasmanians have a right to know all the facts on energy project, writes Ruth Forrest.
As usual, when it comes to the Marinus Link project there are more questions than answers.
Barely four weeks ago Premier Jeremy Rockliff drew a line in the sand and told his federal counterparts Tasmania couldn't afford two Marinus cables, certainly not "at any price".
Four weeks later how about one cable?
Are we to believe that in less than a month the number-crunchers have revised all their plans, budgets and models and decided one cable will do the job? Exactly what job is that?
Energy Minister Guy Barnett told us: "Private energy investors and utilities such as Hydro Tasmania will be able to export renewable electricity they generate to the mainland at a profit." But Tasmanian Chamber of Commerce and Industry chief executive Michael Bailey reckons, "the announcement gives investors and developers the green light to begin building the vital clean energy generation projects that will power Tasmania's economy for generations to come".
There's a third possibility also raised by Mr Bailey, that "more renewable energy projects getting over the line was the key to reducing the cost of energy bills for everyday Tasmanians." Which is it?
Are we to become an exporter or an on-island user? If the latter, why do we need Marinus? How is more onisland renewable energy going to drive down electricity prices when Tasmanian prices are determined by Victorian wholesale prices? People resent being treated like idiots, being told that to lower Tasmanian prices we must export more renewables to Victoria, which will lower Victorian wholesale prices, which in turn will flow through to local prices.
Costs have doubled, which means one cable will still cost $3.3bn. We will have to put in $117m. Victoria and the federal government will put in $543m and the rest, $2.64bn, will be borrowed.
What Mr Barnett hasn't told us is that when the Australian Energy Regulator determines how much consumers will have to pay for Marinus, the cable will be valued according to its market benefits.
There is no-one in the country, except maybe TCCI's Mr Bailey, who believes that Marinus will be valued anywhere near its $3.3bn cost. Which means that as soon as Marinus becomes operational its value will fall and we will have to write off our equity contribution.
We have been told the Australian government is prepared to buy our share of Marinus, but you can guarantee that means after the regulator has revalued the cable which will result in our equity contribution being wiped out. Our share will be worth zero only if the federal government agrees to take over all the debt. Otherwise, we might have to pay them to take over our share.
At this stage we need to view our $117m contribution not as an investment that will reap dividends, but as a subsidy to help others reap benefits, possibly Hydro, but also the foreign-owned wind farms with few local employees.
Marinus is now proposed as a 750MW cable. That's a measure of how much electricity it can transmit.
It's half as big again as the existing Basslink cable with a capacity of around 500MW. Basslink was bought by its new owner APA for $773m. The regulator is currently in the process of assessing the value of Basslink, which will determine how much extra consumers will be charged. The extra amount then gets paid to APA as Basslink revenue. No doubt APA will be hoping for a cable value as high as possible so it can extract as much as possible from consumers. But it can't be greater than its cost. Nor can it be greater than the assessed value of the cable based on its market benefits.
The same rules will apply to Marinus.
The government admitted dispensing with one of the Marinus cables was no big deal as two thirds of the benefits flow from the first cable.
Which pre-empts the obvious question, how much extra will a 750MW cable add to the existing 500MW Basslink connection? This is the question the regulator will tackle as the value of Marinus is assessed.
Will it be high enough to allow Marinus to extract enough from consumers to foot the bill, or will equity partners be required to chip in to service the $2.64bn debt? Either way it won't be a free lunch.
The complexity of the electricity industry favours insiders and consultants who run the show, rather than consumers. Even if Marinus doesn't proceed, we will have spent over $200m. When finally deciding whether to give Marinus the green light, these feasibility costs will be conveniently ignored because it will be argued they are sunk costs, they are irrecoverable.
Consumers are the forgotten people, held hostage by the feasibility study industry who never lose regardless of the outcome.
So rather than slap each other on the back for an alleged step forward, an announcement without all the relevant detail, let's take a breath and ask some more questions, and ask those in the know to provide responses all Tasmanians can understand.
The Mercury, Saturday 9 September 2023