Synergy merger legislation introduced

The state government has introduced legislation to merge Synergy and Verve Energy, but is yet to release regulations that will specify how existing contracts between the government entities and the private sector will be protected.

The amendment to the Electricity Corporations Act 2005 aims to implement the merger of the retailer Synergy and the electricity generator Verve Energy into one entity, called Synergy, by January 1 2014.

In a speech to parliament introducing the bill, Energy Minister Mike Nahan said the aim of the merger was not to re-establish a government monopoly but to address inefficiencies.

Mr Nahan said the amended legislation would allow regulations to be made to segregate certain functions within the merged entity. 

“Under these regulations, some functions within the merged entity will be subject to ring-fencing, a transfer pricing mechanism, and protocols governing the flow of sensitive information,” he said. 

“These mechanisms and protocols will be designed to ensure that the merged entity will not unduly preference its own retail and generation arms over third party retailers and generators. 

“This will increase pressure on the merged entity to be efficient, reducing upward pressure on electricity prices.”

Mr Nahan said the amended legislation would also allow the energy minister to approve arrangements for wholesale trading of electricity by Synergy. 

“It is intended that this power will be used to oblige the merged entity to offer a range of standard wholesale electricity products on a non-discriminatory basis across the merged entity’s own retail business unit and other wholesale electricity customers,” he said.

There would be civil penalties that could be imposed on Synergy if it did not comply.

The WA Independent Power Association declined to comment until they had read the amendment in full.