18/12/2008 - 17:56

ERA against Synergy-Verve merger

18/12/2008 - 17:56

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The state's Economic Regulation Authority says a re-amalgamation of Verve Energy and Synergy will have adverse implications on the wholesale energy market.

ERA against Synergy-Verve merger

The state's Economic Regulation Authority says a re-amalgamation of Verve Energy and Synergy will have adverse implications on the wholesale energy market.

In its Annual Wholesale Electricity Market Report, the ERA said a merger Verve Energy with retailer Synergy would "destroy" competition.

"Both retail and generating activities within the WEM [wholesale electricity market] are currently dominated by state-owned businesses, namely, Synergy and Verve Energy, respectively," ERA said in its report.

"... this concentrated structure has led to a quasi-bilateral monopoly market structure in the WEM.

"Such a structure is likely to reinforce the barriers to new entry resulting from non-cost reflective tariffs and the absence of FRC [full retail competition].

"In addition, the Authority understands that the new government may be considering a merger of Verve Energy and Synergy.

"The Authority considers that the existence of such a dominant 'gentailer' in the WEM would destroy effective competitive tension in the market with adverse impacts on efficiency."

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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