Power retailer Synergy found to have price-gouged customers up to $100 million


April 03, 2019 17:01:09

Electricity producer Synergy overcharged industrial customers for the price of energy in the wholesale market by up to $100 million, in a move which may have also pushed up prices for households, an investigation by Western Australia’s independent economic regulator has found.

Key points:

  • Synergy increased wholesale prices over 15 months from March 2016 to July 2017
  • Its actions pushed up prices across the wholesale market by up to $192 million
  • Household bills may have been hit as a result, but Synergy has rejected that

The Economic Regulation Authority (ERA) said Synergy had breached market rules requiring it to sell electricity for about the same amount it cost to produce.

It will now bring proceedings against the company before the Electricity Review Board in “the interests of Western Australian consumers”.

The ERA examined 14,812 trading intervals by Synergy between March 2016 and July 2017, and concluded its price gouging over those 15 months increased its revenue by between $40 million and $102 million above what it would have otherwise received.

The regulator found Synergy’s behaviour was directly related to its market power. It is the largest generator in the WA wholesale market, with 30 individual generators.

The ERA calculated the company’s pricing behaviour had a wider effect on the wholesale market and pushed up prices generally between $100 million and $192 million.

It said there was a likely flow-on effect to retail customers because it created an environment of higher prices in the market, which the Government would have had to consider when deciding on electricity prices for retail customers, including households.

The penalty for a first breach of the market rules is $50,000 and $100,000 for subsequent contraventions.

Residential customers not impacted: Synergy

Treasurer Ben Wyatt said the allegations against Synergy were not a good look.

“Ultimately this is what you get when you create a monster like Synergy, which I remind you all was the merger of Synergy and Verve, giving [it] significant market power,” Mr Wyatt said.

In a statement, Synergy said it was reviewing the ERA’s findings before considering its options.

But it denied any residential customers had been affected by the pricing issue.

“The investigation relates to wholesale electricity and is not related to retail tariffs which are set annually by the State Government,” it said.

“There is no impact on residential consumers.

“Synergy provided significant detail and worked with the ERA throughout the process.”





First posted

April 03, 2019 16:45:39

Source link

About the Author

Australia News
More Than 20 Years in News and jobs

Be the first to comment on "Power retailer Synergy found to have price-gouged customers up to $100 million"

Leave a comment

Your email address will not be published.


%d bloggers like this: