State-owned power generator and retailer Synergy has recorded a loss of $12.6 million for the 2017 financial year on the back of lower sales revenue and a large impairment due to the early closure of its generation capacity.
State-owned power generator and retailer Synergy has recorded a loss of $12.6 million for the 2017 financial year on the back of lower sales revenue and a large impairment due to the early closure of its generation capacity.
The company's operating subsidy was reduced by $27 million to $280 million, down 45 per cent on the 2014 financial year.
Revenue fell from around $3.1 billion to be $3 billion, while the underlying loss doubled to $27 million, according to the company’s annual report tabled in parliament today.
By comparison, the company made a $32.2 million after-tax profit in the 2016 financial year.
Electricity sales and gas sales were down on the previous financial year.
About 13.4 terawatt hours of power were sold, a fall of 2.9 per cent, with the company citing the rapid take-up of rooftop solar and increased retail competition as the key drivers.
But it was gas sales that dropped most significantly, after the closure of the South West Cogeneration plant.
Synergy sold about 26,000 terajoules of gas, mostly to business customers, in the 12-month period, a fall of 20.2 per cent on the previous year.
That can be expected to decline further, with Treasurer Ben Wyatt flagging the end of the company’s tariff assistance program in the next four years.
Synergy chief executive Jason Waters said there were significant challenges faced by the energy sector.
“Never before in my 27 years in the industry have the forces of policy and regulation, consumer interests, broader economic conditions and new technologies conspired to make a once reliable and stable industry so difficult,” he said.
Mr Waters said the company’s after-tax loss included a number of significant items, such as a $126.5 million depreciation and impairment charge ahead of the the closure of 380 megawatts of generation capacity in 2018.
“It was a difficult-but-necessary decision given the oversupply of capacity that exists in the electricity market being funded by consumers,” he said.
“The other significant items include $47.4 million profit from the sale of the Mumbida wind farm, benefits of $84.1 million from the adjustment of our decommissioning provision, and $61 million in revalued derivatives and swaps.”
Chairman Lyndon Rowe backed the state government’s push toward tariff reform.
“The new state government should be congratulated for making the tough, but completely necessary, decision to undertake tariff reform,” Mr Rowe said.
“Increasing electricity prices is not a vote winner but there were many inequities and inefficiencies in both the level and structure of household tariffs particularly related to the cost of network connection.
“The reality was that the cost of the network was increasingly being paid for by a smaller and smaller group of customers (often those with the least capacity to pay or avoid those costs) or the Western Australian taxpayer.
“Everyone benefiting from network connection should be paying for the cost of that connection.
“What the state government has undertaken is fair reform, consistent with enabling the market to operate successfully.
“It was an important first step on the way to a more efficient and fair energy market.”
