• Australian energy companies accused of abusing market power
Australian energy companies accused of abusing market power
07 Jan, 2019, 1 Comment

Summary: WA’s economic watchdog has blasted electricity provider Synergy, accusing the State-owned firm of abusing its market power to artificially inflate power prices.....

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In a scathing report about the state of the electricity market, the Economic Regulation Authority said consumers were likely paying too much because Synergy was exploiting its dominance.


At the heart of the ERA’s concerns was the wholesale electricity market, where prices were rising despite stable or falling coal and gas costs and low demand.


Wholesale prices make up about 40 per cent of the typical household power bill.


Synergy has claimed the flood of green power on to the grid is raising its costs by forcing the utility to run its fleet of coal and gas-fired plants less efficiently.


But the ERA said there was no “strong evidence” to support these claims, although it acknowledged this may happen in future.


Instead, the ERA said it appeared Synergy was using its position as the biggest generator in the market to push wholesale electricity prices higher than they otherwise would be.



It noted Synergy either owned or controlled 80 per cent of the generation in the market and could use elevated prices in the wholesale segment to offset losses in the retail segment for big users, where it was subject to competition.


The ERA “is concerned that Synergy has market power and that there was not enough competition for Synergy in the wholesale energy market to keep wholesale prices down”.


“In the absence of competitive pressure, Synergy’s market power needs to be reduced to limit the extent to which Synergy can misuse its market power to push up wholesale prices,” the ERA said.


A Synergy spokesman said the utility would respond to the paper but noted it operated in a heavily regulated market.


The spokesman insisted demand for rooftop solar, which rose 25 per cent last year, was having major effects on Synergy’s profitability.


“The shift away from centralised, scheduled generation has profound consequences for Synergy,” the spokesman said.


 

Daniel Mercer, 28/12/2018, thewest.com.au/business/energy/economic-regulation-authority-synergy-abusing-market-power-on-electricity-prices-ng-b881060586z

Comments.
  • MyPassion

    Anonymous
    08 Jan, 2019

    Power companies use Implied Easements to occupy your land for free to put power lines across your property. There is no record of any agreement kept and they have taken your property rights. Implied easements have been banned in some states but not here in W.A. and there is no explanation why they are still used! However the Landowners still own the land and they refuse to give information such as what is the insurance policy they have on your property for loss of life, injury or property. access requirements such as Biosecurity etc. and then claim they have answered all your questions along with their only shareholder, the State W.A. Government. No communication for over 150 days from the Energy Ombudsman and now I have sent the matter to the C.C.C. What has happened to our country? There has to be an investigation into the Energy Providers methods of operation and the W.A. Government. They both do not tell the truth and the watchdogs do just that! No one is investigated or prosecuted and the Landowner continues to suffer. Transparency is just a joke here in the West and in reality does not exist in W.A.

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