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20th of January 2018

Economy



Basslink cable failure shaping up for drawn-out legal battle, expert says

A protracted legal battle over the Basslink power cable failure could last more than two years, energy expert Marc White has warned.

Hydro Tasmania blamed Basslink's operators for the failure in 2015, pointing to an expert report it commissioned that found Basslink Pty Ltd (BPL) overused the cable and caused it to degrade.

It said the findings solved the mystery surrounding the cause of Tasmania's 2016 energy crisis, but Basslink hit back, claiming the cause for the power cable failure remained unknown.

Tasmanian energy expert Marc White described the release of Hydro's report as a "significant development".

"We were sold a product that's meant to do one thing, and now Hydro's experts have called into question whether the project can actually deliver on that over the next twelve years of the agreement," Mr White said.

He said it also had implications for Victoria, which bought power from Hydro.

Energy analyst Marc White

"Victorians have been expecting to rely on 630MW of peak power over summer, and if that's reduced to 500MW that will have significant impacts on how Victoria sources that power on the hot days of summer," he said.

Mr White said the dispute could get messy.

"We expect this will now play out in a legal battle for in excess of two years.

"On the one hand, if they reduce consumption to that 500MW limit, they are at risk of looking like they've conceded to Hydro's points; on the other hand, if they continue to run the cable at 600MW and it fails, there's clearly implications for them."

The power crisis was triggered by the failure in December 2015 of the Basslink cable which then combined with low dam levels.

The undersea cable connects Tasmania to the national electricity grid.

Cable 'cannot meet minimum operating requirements': Hydro

A statement issued on behalf of Hydro boss Steve Davy said "issues related to heating and cooling of the cable under operational stress probably caused the December 2015 failure".

"BPL believed its cable could safely and reliably operate at 630MW for extended periods without overheating the copper and insulation and causing an unreasonable likelihood of failure," Mr Davy said.

"Unfortunately, they were wrong. The expert reports note that the cable, as designed and constructed, cannot meet the minimum operating requirements."

A fault located in the Basslink cable

Mr Davy said the reports recommend limiting the state's energy export capacity to 500MW.

"The experts are confident Basslink can safely and reliably operate at 500MW," he said.

"The expert investigation identifies the probable cause of the cable failure. But most importantly, it also identifies both interim and long-term solutions to ensure Basslink can operate as reliably as it was supposed to in future."

Hydro believes adopting that level, will ensure safe and reliable operation of the cable to support Tasmania's contribution to Victoria's energy supply over summer.

"We received the expert reports in recent days, and have submitted them to BPL," Mr Davy said.

"The Basslink cable is the sole responsibility of its owner. It's now incumbent on BPL to consider the reports and take the necessary steps to improve its cable to the standard and specifications promised."

Basslink maintains failure was due to 'cause unknown'

BPL previously said the cable was being run within its thermal limits, and in statement on Wednesday said it was reviewing the reports.

"We are currently reviewing the reports, which were provided to Basslink Pty Ltd this [Wednesday] morning," it said.

"Basslink stands by the independent investigation that was undertaken by Cable Consulting International (CCI), one of the world's leading submarine power cable experts, who described the exact cause of the subsea cable fault as 'cause unknown'.

"Based on the findings of CCI, Basslink maintains the cable fault was a force majeure event."

Keppel Infrastructure Trust told the market last month it was undertaking a "strategic review" of the cable, and had expressed an interest in selling the asset.

When asked if Hydro was considering purchasing the cable, Energy Minister Guy Barnett said it was "off the table".

"We are monitoring the matter very carefully, and as a government we've made it clear to the Hydro that we're not involved in the sale process," Mr Barnett said.

"We're not intending to go down that path, we've advised Hydro that it's off the table in terms of where we're at as a government."

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