Hydro Tasmania is in hot water over legal bills and maintenance costs.

Media investigations have shown that the Tasmanian Government-owned company spent about $3.7 million on legal fees between October 2012 and December 2013.

The money was spent on a legal battle with the Singapore-based operator of the Basslink cable, CitySpring, which Hydro Tasmania claims limited the state’s power exports by not running the underwater cable at capacity.

When out of court negotiations failed, the companies appointed former High Court Chief Justice Murray Gleeson to arbitrate.

While it was costly, energy analyst Marc White says that with about $1.5 billion in value still left on the contract between Hyrdro and CitySpring, the legal costs were necessary to find out where each company stands.

The stoush is part of Hydro’s attempts to bounce back from losses incurred during the six-month outage of the Basslink cable earlier this year.

Hydro says the energy crisis that the cable failure caused cost close to $180 million, including the cost of bringing in diesel generators.

Basslink's parent company Keppel says it is working with its insurer on a claim, but that the cause of the fault is still not known.

Meanwhile, the State Opposition has opened fire on internal reports – or lack thereof – which appear to show Hydro Tasmania struggling to cope with maintenance costs and avoiding embarrassment at the same time.

Labor lodged a Right to Information (RTI) request for Hydro Tasmania’s 10-year asset management plan 2016, but received a heavily-edited version that had large sections of paragraphs, sentences and even single words redacted.

The report appears to suggest that the company will not be able to maintain Tasmania’s hydro-electricity network under its existing maintenance budget.

University of Tasmania RTI expert Rick Snell says that he believes much of the report was redacted to avoid embarrassment.

Tasmanian Renewable Energy Alliance chief Jack Gilding says the state should move quickly into the growing renewable industry, reducing its reliance on the Tamar Valley gas-fired power station and using “hydro storages as a big battery to cope with variations in wind and solar”.

“A well-designed reverse auction would also identify niche opportunities where solar may already have advantages over wind in particular locations,” Mr Gilding says.

“We do not need to wait until the Energy Security Taskforce reports in the middle of next year to know we need to diversify and increase our on-island generation capacity.

“The State Government should act now to... meet our generation shortfall.”