Thousands of WA households will be given a $28 credit on their power bill after Synergy admitted to inflating wholesale prices and agreed to pay $30 million.

June 27, 2023

Thousands of West Australian households share in $30 million after an electricity company used its market power to inflate wholesale prices.

State-owned Synergy has agreed to give eligible residential customers about $28 credit on their next bill over the rule breach.

The settlement follows an Electricity Review Board finding in November that WA’s largest electricity generator, and a retailer of gas and power, unreasonably hiked prices about 11,000 times in 2016 and 2017.

The Economic Regulation Authority, which brought the case before the board, said it negotiated for the $30 million to be paid directly to Synergy customers rather than back to the wholesale market buyers.

“This will provide some relief to the current cost of living pressures,” chair Steve Edwell said on Tuesday.

The credits to South West Interconnected System will be made over the next four months.

Synergy has also agreed to undertake an independent review of its contravening conduct, including its market bidding behaviour.

“Electricity generators must ensure that the costs underpinning their wholesale market prices are consistent with the market rules,” Mr Edwell said.

“This is especially the case for generators who have market power.”

The wholesale electricity market rules require dominant generators to price their electricity based on their reasonable expectation of marginal costs.

Synergy said its conduct did not directly affect the price of electricity for residential customers and the household credits are not compensation for an overcharge.

“Rather, it is being provided as a result of Synergy’s agreement with the ERA that the ERA will not seek a civil penalty for the contraventions of the wholesale electricity market rules,” the company said in a statement.

It also said it had been working with the authority to ensure its bidding behaviour complied with market rules.

“Synergy is committed to complying with the wholesale electricity market rules and engaging with the ERA going forward so that it remains compliant,” a spokeswoman said.

The authority is WA’s independent economic regulator tasked with ensuring water, electricity, gas and rail services are provided in a manner that is beneficial to consumers.