Experts have recommended the Tasmanian Government sell TasNetworks.

The Grattan Institute has warned that Tasmania faces an electricity ‘death spiral’; where high power prices push consumers to set up their own solar systems, which lowers electricity consumption from the grid and makes it more expensive for remaining consumers, continuing the cycle.

The analysts say overinvestment in the state-owned electricity distribution and transmission network has increased the average annual power bill by about $150.

“Poor decisions by governments, in the form of overzealous reliability standards, and poor decisions by these businesses, in the form of excessive capital spending, have together produced much higher electricity prices for consumers,” the report said.

Grattan says the Tasmanian Government should write down the value of TasNetworks by $750 million and consider privatising the government business enterprise.

Most of Tasmania’s transmission lines run at less than 40 per cent capacity, so the state enjoys a high reliability system but pays for the privilege.

TasNetworks delivered over $90 million in net profit last year.

The Tasmanian Small Business Council has set up a formal investigation into TasNetworks’ revenue and rate of return.

Questions have been asked about whether the regulated rate of return was fair and reasonable.

The Government says TasNetworks will not be privatised.

Instead, the Government is seeking to extend the consumer price index cap on electricity bills and de-link electricity prices from the National Energy Market.