Only 5% of households and 2% of businesses in Tasmania are connected to the gas provide, Goanna power Consulting said in a report for the Tasmanian Small Business Council.

Not every Tasmanian home or business has access to the gas provide, but of the approximately 43,000 potential customers only 12,508 own connected, the report said.

The 13-year aged Tasmanian gas market is “small and vulnerable” and “potentially at risk of spiralling into failure” Goanna power said.

The scale of the market in Tasmania means big unit costs, and the fixed costs associated with building and maintaining gas pipeline assets “require to be recovered over season from users and the number of gas molecules transported through the infrastructure. locate simply, the less gas that is transported, the higher the unit cost becomes”, the report said.

However, unregulated pricing has stopped the market from growing as expected or reaching “critical mass”, the report said.

Goanna power proposed that pipeline assets could be classified as a regulated asset, with a regulated financial return to the owners.

While the Tasmanian government is not responsible for saving a private power asset owner, it also should not “permit the market to stagnate and ultimately risk it failing. Better that the government act as a facilitator of market growth, and remove structural imperfections and any price distortions”, the report said.

Infrastructure expert Simela Karasavidis of Pinsent Masons, the law firm behind Out-Law.com said: “The power mix in Tasmania is changing with natural gas reticulation, the Basslink undersea electric cable and wind power contributions to power sources becoming increasingly important. It would be a big blow to Tasmania and the Australian gas industry if the gas market fails in Tasmania, irrespective of the economics. The gas industry and its advisers will be keeping a shut eye on what action, if any, the government takes as a result of this report.”