The Labor party's plan to overhaul Tasmania's energy sector appears set to go ahead, with the Greens poised to support it.
The Greens appear to be backing away from their policy to set up three trading rooms within Hydro Tasmania to weaken its market power.
Treasury analysis shows the plan is not possible because the Australian Competition and Consumer Commission - which was supposed to oversee the trading rooms - does not have the jurisdiction.
The party is now likely to support its minority government partner when legislation allowing competition is tabled next week.
The Greens Leader, Nick McKim, did not rule it out.
"Well that's certainly a possibility at this stage but ultimately we're still in discussion with Labor about those things," Mr McKim said.
"In the position paper that we released we didn't rule out supporting regulation to bring power prices down." The Opposition spokesman Matthew Groom says a deal is being done.
"What we are seeing yet again on power prices is a secret back room deal between Labor and the Greens that's about political survival," he said.
Labor and the Greens are expected to announce a deal next week so legislation can pass the parliament before the end of year.