Closure of major industrial companies risks hit to Tasmanians' power bills

Closure of Tasmania's major industrial companies could cause household power bills to rise Thu 30 Jul 2026 at 1:31pm In short: The closure of major industries in Tasmania could push up power bills, with households and small businesses possibly forced to cover the millions of dollars previously paid by them. One leading energy analyst estimates the closure of Liberty Bell Bay could push up the average power bill by 0.6 per cent, though TasNetworks says it has absorbed the cost this financial year. What's next? The power used by major industrial companies could be sold elsewhere at a much higher price, presenting a "significant opportunity", the analyst says. Household energy bills could be forced up by the closure of major Tasmanian industrial companies, a leading energy analyst has warned, while pointing to the potential need for costly transmission upgrades. The Liberty Bell Bay manganese smelter announced its closure earlier this month, following a period of voluntary administration. Meanwhile, negotiations for a power deal at Bell Bay Aluminium, the state's biggest energy consumer, are continuing, with a risk it may close. It is understood owner Rio Tinto has set an end-of-August deadline to reach a new deal with state-owned electricity generation company Hydro Tasmania, before it considers shutting the factory. However, it could also provide a windfall gain for Hydro Tasmania, which would be able to sell the spare energy for two to three times as much as the major industrials pay. Energy analyst Marc White said TasNetworks had been set a maximum figure it could charge its customers by the Australian Energy Regulator, including that paid by Liberty Bell Bay. "TasNetworks are potentially allowed under the regulatory model to recover that money from the remaining users,"Mr White said. The exact figures charged to major industrials are kept commercial in confidence, though Mr White estimated Liberty Bell Bay had paid about $8 million per year in network costs. Spread among other power customers, it would be equivalent to a 0.6 per cent rise on the average power bill. Mr White also estimated Bell Bay Aluminium paid $25 million per year in network charges, which, he said, could lead to another 2 per cent rise to bills if that facility closed. TasNetworks interim chief executive Renee Anderson said the figure paid by Liberty Bell Bay was "more modest" than Mr White's estimate, but did not give an exact amount. "They had a fairly significant reduction in their load over 12 months ago, which we supported them from a cost impact." She said that TasNetworks had absorbed the loss this financial year and the company did not yet have a position on whether it would do so in future years. Balance of power grid a priority Along with paying the lion's share of costs related to the state's transmission network, all the major industrials play an important role in keeping the grid in balance. The two Bell Bay facilities, along with the Boyer Paper Mill and Nyrstar Zinc Smelter, are contractually obligated to reduce or increase their energy usage when asked, to keep the network in balance, known as the System Protection Scheme (SPS). Mr White questioned whether major upgrades to the George Town substation might also be required as a result of smelter closures. "TasNetworks might actually trigger another $120 million investment in the George Town substation because they no longer have that System Protection Scheme load available from Bell Bay Aluminium," he said. Ms Anderson said the SPS would not be affected by the closure of Liberty Bell Bay, but said the situation would be reviewed if Bell Bay Aluminium were to shut. "There are a lot of things that could trigger changes or investment in our infrastructure, including at George Town, so we would just follow our regulatory processes depending on what that trigger was,"she said. Spare energy presents 'significant opportunity' Bell Bay Aluminium uses approximately 355 megawatts, or 25 per cent of the state's total energy. Meanwhile, Liberty Bell Bay used approximately 90 megawatts, or about 7 per cent of the state's total energy. Tasmania's major industrials receive significantly cheaper power. This week, Industry Minister Felix Ellis said the facilities paid a quarter of the price for energy that households did, and half of what was offered to smelters on the mainland. Mr White estimated Liberty Bell Bay had been paying about $40 million per year for its energy, and that Bell Bay Aluminium was paying about $100 million per year. He said Hydro Tasmania could sell that energy for two to three times as much elsewhere, through a mix of new contracts and selling when prices were high. "It would contract some to have stable cash flows, but it would also probably seek to play some on the arbitrage or the spot market,"he said. When built, the $5 billion Marinus Link undersea connector between Tasmania and Victoria will more than double Hydro Tasmania's capacity to trade energy with the mainland. Data centres, which use significant amounts of energy, have been floated as potential replacement buyers for the energy used by major industrials. Firmus Technologies, which is building a 100MW centre at St Leonards and has two more facilities planned, says it receives no discount on its power. Public 'ought' to know smelter discounts Following the closure of Liberty Bell Bay, and the upcoming closure of Boag's Brewery, there have been concerns about the impact of another hit to northern Tasmania's economy. Bell Bay Aluminium employs more than 500 people, plus 120 contractors, and is estimated to indirectly support nearly 1,000 other jobs. The state government counts the smelter's total economic contribution at more than $500 million. Rio Tinto and Hydro Tasmania were unable to reach a deal for a new power agreement last year, instead signing a one-year extension, which ends in December. Rio Tinto has said it is working in good faith with Hydro Tasmania, while the state-owned power company has said it is offering a price that is as low as it can go without it becoming "uncommercial". The state government has so far refused to intervene in the negotiations and has instead called on the federal government to make its Green Aluminium Production Credit scheme available to the smelter. Trickier bargaining position Economist Saul Eslake said the power prices that major industrials paid should be made publicly available. "The public ought to be able to make an informed judgement as to whether the cost in terms of revenue foregone, of delivering electricity at below market prices to big users, is worth it,"Mr Eslake said. Mr Eslake was a board member of Hydro Tasmania between 2008 and 2018. He said Rio Tinto had always played a "tough hand" in power price negotiations. "This is one of the downside risks for any government that seeks to attract a major employer by offering financial inducements," he said. "Once you have done that the first time, they in effect have a very strong bargaining position with the government of the day." [Image text:] DANGER OVERHEAD DO NOT CLIMB