Basslink has refuted claims by the Tasmanian government that it breached the Basslink Operations Agreement (BOA) contract it has with the state as the operator of a telecommunications and energy subsea cable, also denying that it is liable to the more than AU$100 million in losses the state is claiming.
Basslink will "vigorously defend any legal action", it said on Thursday night.
"Basslink strongly denies the allegations set out in the state's letter," the company said, saying this includes breaching warranties on the design and construction of the submarine cable.
"As part of the commissioning of the Basslink Interconnector in 2006, the Basslink Interconnector was rigorously tested to ensure the design and construction requirements were satisfied.
"Given that the Basslink Interconnector was completed and commissioned more than a decade ago, Basslink is extremely surprised at these very belated allegations by the state and strenuously denies that any warranties under the BOA were breached."
According to Basslink, an independent inspector had signed off the design, construction, and commissioning requirements.
"The state, through Hydro Tasmania, was very closely involved in the design, construction, and commissioning process. This involvement included attending various meetings with both Basslink and the manufacturers," the company argued.
"Basslink maintains the cable failure was a force majeure event."
The Tasmanian government had on Thursday threatened to take legal action against Basslink.
"The state proposes to initiate the dispute next week unless Basslink agrees to compensate it for its losses," Energy Minister Guy Barnett said.
This followed the reports from two global experts provided to Hydro Tasmania in December, which found the Basslink subsea cable outage of 2015-16 was caused by Basslink (BPL) exceeding its design limit, which then degraded the cable.
The findings on the subsea cable were made by a power cable failure expert and a thermal modelling expert from international engineering consultancy DNV GL.
"The DNV GL analysis indicates that the cable had been operated by BPL in a manner that allowed it to exceed its temperature design limits during a number of periods in its service life. This overheating and subsequent cooling of the cable has resulted in degradation of the cable," Hydro Tasmania said.
"DNV GL concluded that the cable failure was the probable result of electrical energy discharge within the cable as a result of polarity reversal and cooling shortly before the 20 December 2015 cable failure."
Hydro Tasmania, a state government business enterprise that is responsible for a majority of the state's energy generation, at the time said the findings "vindicate" its decision to have the outage investigated.
Basslink responded by saying the outage was not caused by anything other than a chance occurrence.
"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'," Basslink said.
The Basslink Interconnector was down between December 2015 and June 2016. The fault in the cable was discovered 90.5km from the Tasmanian coastline and removed and capped three months after going down.
The outage had lasted so long that the Tasmanian government got involved, with Minister for Information Technology and Innovation Michael Ferguson also reprimanding TPG for not buying additional capacity on Telstra's cables during the outage.
Telstra had commented that it is the duty of telcos to provide continued services for their customers despite outages, with TPG thereafter negotiating for extra bandwidth over Telstra's fibre-optic cable.
Basslink finally completed its cable jointing repairs in June last year following months-long delays due to excess water damage.
At the time, Basslink had said it would require six days of consecutive clear weather to repair each of the three joints; in May, it announced losing more than 20 days to inclement weather.
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