The Economic Regulation Authority (ERA) and Government-owned energy retailer and generator, Synergy have agreed to a settlement in respect of proceedings brought by the ERA before the Electricity Review Board.
The proceedings related to Synergy’s bidding behaviour in the wholesale market.
The agreement requires Synergy to pay the sum of $30 million for its contravention of the Wholesale Electricity Market Rules.
In 2019 the ERA filed an application with the Electricity Review Board alleging that Synergy had breached the market rules by pricing its electricity in the balancing market above its reasonable expectation of short-run marginal costs and that this behaviour related to its market power.
In an investigation covering April 2016 to July 2017, the ERA alleged that this increased the price of electricity in the wholesale balancing market.
The Electricity Review Board’s decision in November 2022 held that Synergy engaged in the contravening conduct alleged by the ERA, and made directions for a further hearing on the penalty for the contravening conduct.
The ERA and Synergy have now settled this matter by agreement with the $30 million sum distributed to eligible non-contestable residential customers.
This means that households will receive a direct credit of approximately $28 off their Synergy electricity bill, with credits made over the next four months as part of the normal billing process.
Synergy will also undertake an independent review of the internal circumstances around the contravening conduct, including its market bidding behaviour.
Chair of the ERA, Steve Edwell said he welcomed the outcome which brings to an end the long period of litigation.
“The learning here is that electricity generators must ensure that the costs underpinning their wholesale market prices are consistent with the market rules. This is especially the case for generators who have market power,” Mr Edwell (pictured) said.
The ERA is Western Australia’s independent economic regulator, ensuring the delivery of water, electricity, gas and rail services is in the long-term interest of consumers.
