13 September 2002 – Hydro Tasmania’s A$500m ($275m) Basslink electricity interconnector project, which will link the states of Victoria and Tasmania, received approval from the Victorian state government on Friday. The Commonwealth and Tasmania have already given the go-ahead.
“This…piece of infrastructure will bolster the supply of renewable energy to mainland Australia and create new market opportunities for the emerging wind energy manufacturing industry,” Victorian state energy minister Candy Broad said in a statement.
The project only awaits final approval from the Federal government before construction can begin on the 360-km cable, able to transmit 600 MW of electricity.
Hydro Tasmania has hit back at recent criticism of the Basslink interconnection including accusations that it is subsidized and will distort fair competition.
A spokesman for Hydro Tasmania said claims by wind-power specialist Pacific Hydro that the cable would bring unfair competition to the mainland by the Tasmanian taxpayer were untrue.
“Basslink is a strictly commercial deal. We pay an annual facility fee for 25 years and Basslink will build, operate and own the cable. Hydro Tasmania has run the numbers and found it is a commercial deal for us.”
Private generating companies have also claimed Hydro Tasmania is effectively subsidised because it makes a below-commercial rate of return on its assets.
However, the spokesman said Hydro’s low returns stemmed from the financial arrangement put together when the company disaggregated its monopoly in 1998. They were designed to put the company in a break-even situation at disaggregation and allow it to gradually move into profit.
Environmentalists are still opposing the connection, saying above-ground technology is unsightly, that changes in operations will wreak damage to Tasmania’s rivers, and that greenhouse emissions will be increased as Victorian brown-coal generators boost production to supply the Tasmania market.
Proponents say it will use Tasmania’s hydropower more rationally and enable the island state to develop considerable wind energy resources for export to the mainland.