The Basslink undersea cable, owned by Singapore-headquartered Keppel Infrastructure Trust, failed in December 2015, triggering a six-month outage that contributed to an energy crisis in the island state.
In December 2020, the arbitrator, High Court Chief Justice Robert French, found that the subsea cable failure was not a force majeure event and was instead caused by thermal overstressing arising from Basslink’s operation of the 370-kilometre high voltage, direct current interconnector which connects Tasmania’s transmission system with the mainland.
As part of that arbitration outcome, French awarded the state and Hydro Tasmania more than $70 million relating to the failure of the interconnector and ordered Basslink to undertake a number of actions to improve the operational performance and reliability of the cable.
Following that decision, the state government and Hydro Tasmania entered into a Standstill Agreement with Basslink that preserved the rights of the parties and created a framework for negotiations to take place on commercial and engineering matters, while Basslink attempted to refinance its debt and meet its commitments.
In May 2021, the state and Hydro Tasmania agreed to extend the Standstill Agreement but when that agreement expired on Wednesday, Tasmanian Energy Minister Guy Barnett said the state government would not offer another extension.
Barnett said negotiations and mediation attempts had failed and Basslink had not satisfactorily progressed actions required to improve the cable’s operational performance and is yet to pay the more than $70 million as required by the arbitrator.
“For nearly 11 months, Tasmania has acted in good faith in the hope that a resolution could be found, including extending the standstill agreement in May this year,” Barnett said in a statement.
“However, the award payments to the state and Hydro Tasmania remain outstanding and (Basslink) has not adequately progressed the commercial and engineering requirements. It has also failed to secure refinancing.
“The government believes that further negotiations are unlikely to lead to a satisfactory resolution and the current situation cannot be allowed to continue indefinitely.
“The state and Hydro Tasmania will now pursue their legal rights.”
Basslink described the government’s decision to return to the courts as “a deeply regrettable development”.
“We have been making progress on the various arbitration award matters in good faith and in a responsible manner … The announcements therefore come as a surprise,” the company said in a statement.
Basslink said the interconnector continues to operate efficiently and reliably, connecting Tasmania to the National Electricity Market (NEM) and the company would continue to engage responsibly with the state and Hydro Tasmania to come to a resolution.
Barnett said he was confident the legal action would not impact the state’s energy security and Basslink would operate as normal, transferring energy between Tasmania and Victoria.
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