Bell Bay Aluminium prepares to cut more power use as Tasmanian energy crisis drags on

Tasmania's biggest electricity user, Bell Bay Aluminium, is preparing for more power rationing, if the state's energy crisis worsens.

Bell Bay Aluminium has already cut production by 10 per cent for five months to save electricity as the state grapples with record low Hydro Tasmania dams and the extended outage of Basslink's undersea power cable to Victoria. A Labor and Greens dominated Senate committee examining the energy crisis is holding its first hearings in Hobart.

Bell Bay's general manager Ray Mostogl told the inquiry the company was preparing for further power rationing at its smelter if the crisis drags on.

"We've made contingency plans on site to work out if we have to shed more load how would we do it," he said. "They're more longer type decisions, so we've been busy doing that."

Mr Mostogl said the energy crisis had sent shockwaves through Bell Bay Aluminium's customers in Asia.

The company had cut production by 10 per cent, costing the business more than $20 million in lost revenue, and it had been unable to fill some orders from its Asian customers.

"This has sent shockwaves [through] our customers, as per other customers that source products from Tasmania," he said.

Mr Mostogl said major industrials were first contacted by Hydro Tasmania in early January to discuss potential production cut backs to reduce their demand, shortly after Basslink failed. Committee member Greens senator Nick McKim questioned if Hydro was paying companies not to use power.

Mr Mostogl said the commercial arrangements between Hydro and each business would be different.

"There's a moral obligation here as well, and yes, you do need to protect your shareholders and your employees, but we're living on an island and we are in a crisis," he said. "It's not a good look to be sitting there running flat out when we're running out of energy."

The five major industrials consume about 60 per cent of the state's electricity.