Australia's last paper mill and supplier of newsprint remains locked in negotiations for power security, with owner David Marriner saying Tasmanian government-owned energy retailer Aurora has knocked back his offer for compromise.

As one of Tasmania's major industrials, the Boyer pulp and paper mill in New Norfolk is also one the state's largest power users.

Aurora Energy is seeking a $7 million bank guarantee to cover energy costs for the mill as it looks to electrify and move away from its coal-powered boilers.

The state-owned power business says credit security requirements are "entirely consistent with the treatment of all other large electricity users in Tasmania".

Aurora said it had been engaged in discussions since June this year, which had been "constructive and flexible with B

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