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WA households will receive an extra $28 electricity credit after Synergy agreed to a $30 million fine for unlawfully overcharging some industrial customers.
Key points:
- Synergy has been fined $30m for artifically inflating prices
- The regulatory body has requested they pay the fine back to consumers
- WA households will get an extra $28 credit on their power bill
The utility was last year found to have artificially inflated prices more than 11,000 times between 2016 and 2017.
The state's Economic Regulation Authority (ERA) claimed it resulted in the power provider's revenues growing between $40 million and $102 million over that period.
WA's Electricity Review Board was planning further hearings to decide Synergy's penalty for those breaches but has now reached an agreement with the ERA.
That agreement involves the fine being paid to residential customers, meaning each household will soon get an extra $28 off their electricity bill.
It comes on top of electricity credits already given by state and federal governments, which will give concession card holders a $500 credit and other households $400.
All payments are planned to be applied to accounts over coming months.
Gas price behind gouging
At the heart of the issue was Synergy's use of gas contracts to set prices in the state's wholesale electricity market.
Market rules require Synergy to sell electricity for around the same amount it costs to produce it.
But the ERA alleged Synergy used gas prices set in a long-term contract with the Gorgon project, rather than cheaper gas available on the spot market, to make thousands of artificially high bids.
It claimed that Synergy's dominance in the wholesale market, which sees it provide about half the generating capacity, allowed the company to get away with the overcharging.
ERA chair Steve Edwell welcomed the settlement.
"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 in a statement.
"This is especially the case for generators who have market power."
Mr Edwell said the ERA had specifically asked that the $30 million fine be paid to residential customers, rather than to the wholesale market participants affected.
"This will provide some relief to current cost of living pressures," he said.
The ERA said Synergy would also undertake an independent review of the internal factors which led to the price gouging.
In a statement, Synergy said while it agreed to the breaches, they were not deliberate and did not affect residential customers.
A spokesperson said the rules, and particularly how Synergy was allowed to recover its costs, were complex.
"We also look forward to working constructively with Energy Police WA and the ERA to reform the regulatory regime to ensure that market participants can receive adequate compensation for their energy in the future," they said.