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.
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.”