A state-owned electricity provider has agreed to a $30m fine after it was found to have unreasonably hiked wholesale prices, overcharging customers.
As a result of the settlement, eligible WA households will receive around $28 off their next Synergy electricity bill, set to be made over the next four months.
This comes after findings made by WA’s Economic Regulation Authority (ERA) in 2022, where it was discovered Synergy had used its market power to artificially inflate prices between 2016 and 2017.
The state’s largest electricity provider was found to have hiked prices around 11,000 times, resulting in Synergy’s revenues growing between $40-120m within that period.
ERA chair Steve Edwell said the decision to pay the $30m directly to eligible customers instead of back to wholesale market participants was aimed at providing “some relief” to current cost of living pressures.
“The learning here is that electricity generators must ensure that the costs underpinning their wholesale market prices are consistent with the Market Rules,” he said.
“This is especially the case for generators who have market power.”
The $28 credit will be added on top of electricity credits distributed by the state and federal government, which will award a $500 and $400 credit to concession card holders and other households respectively in a bid to curb the cost of living crisis.
The ERA filed an application with the Electricity Review Board in 2019 alleging Synergy breached Market Rules by using more expensive gas prices set in a long-term contract, rather than cheaper gas available on the market, to create artificially high bids.
Synergy was able to overcharge as it dominates the state’s wholesale market.
The electricity company has also agreed to undertake an independent review of the internal circumstances that led to its contravening conduct, including its market bidding behaviour.
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