The Melbourne-based TEST Energy Company, which is controlled by the State's $40 million Regional Infrastructure Fund, will build, own and operate the plant for 25 years under a deal signed with 9 of Tasmania's 12 local councils.

The waste-to-energy plant will be fully funded by the Regional Infrastructure Fund - an investment vehicle for Local Authorities Superannuation Fund, investing on behalf of Victorian local government employees and water authorities.

When fully operational, the plant, which is billed as the first waste-to-energy plant in Australia, will handle 200,000 tonnes of municipal solid waste a year. "It will be generating 17 megawatts gross of electricity, which will be enough to power approximately 17,000 homes a year," said TEST managing director, Craig Ransley.

TEST Energy hopes to start building the plant by December, and completion is expected by 2004.

In other Tasmanian energy news, the $500 million Basslink undersea electricity link between Tasmania and the mainland should be approved by the Federal, Victorian and Tasmanian governments, according to a final report by the joint advisory panel investigating Basslink.

The Tasmanian Premier indicated his government would immediately approve the project if his government is re-elected on 20 July.

Tasmania plans to export electricity along a 360km cable to Victoria during times of peak demand and higher prices, while importing cheaper power from the mainland in off-peak periods. The plan also involves developing wind farms in the state's north-west to supplement the electricity produced from hydro sources.

"The project would unlock Tasmania's wind potential and cement the state's position as Australia's renewable energy powerhouse," said chief executive of Hydro Tasmania, Geoff Willis.