Barnett keen on Verve-Synergy merger

29/05/2009 - 11:33

A merger between generator Verve Energy and retailer Synergy is still on the cards with Premier Colin Barnett expected to make an announcement in the next couple of months.

A merger between generator Verve Energy and retailer Synergy is still on the cards with Premier Colin Barnett expected to make an announcement in the next couple of months.

Mr Barnett made the comment in Parliament yesterday and added that the 2006 split of Western Power into four separate utilities had been a "catastrophe".

"We need to fix the situation as well as we are able to, and part of that fix is having Verve and Synergy as one entity," Mr Barnett said.

"There are a lot of aspects to this argument, but Synergy has the customer base and the cash flow, and not much in the way of assets; Verve has the assets but no cash flow of any substance.

"The vesting contract that was set up is full of problems.

"Even the price increases that have been put in place do not necessarily flow through to where the losses are accumulating in Verve."

Verve has around $1 billion in debt, Mr Barnett said.

The Premier added that there was one energy utility too many in the South West grid and the government was looking into that issue in detail.

Mr Barnett campaigned against Labor's break-up of the old Western Power into four entities: generator Verve, tranmssion arm Western Power, electricity retailer Synergy and regional utility Horizon.

He first flagged the merger idea late last year and has since appointed former Western Power managing director David Eiszele as the new Verve chairman.

In 2003, Mr Eiszele resigned from Western Power in controversial circumstances, after he questioned the break-up of the utility into four separate businesses.

The Economic Regulation Authority is against the re-merger of Verve and Synergy, previously saying it would have adverse implications on the wholesale energy market.

The Chamber of Commerce and Industry of WA has also spoken out against the idea.


 

 

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