WA-owned Synergy will plunge to financial loss

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Western Australia’s State-owned power provider Synergy will crash to a financial loss according to the ABC, which reports the Government has made efforts to keep a lid on power price rises.

In estimate hearings at the State Parliament last week, it was revealed that Synergy may need to borrow $140 million over the next four years, with WA Energy Minister Bill Johnston confirming the company will fall into the red in 2019-2020.

The McGowan Government revealed in the state budget a modest increase in power prices of 1.75 per cent – being forecast as seven per cent in last year’s budget.

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Mr Johnston said the cost would be worn by Synergy, adding that he was not concerned the company was operating at a loss, stating that it was not unusual for the government to stand behind state-owned companies.

Synergy, according to Mr Johnston, said the company’s capital reserves would avoid it going into debt to pay for its daily bills.

“Every activity of Synergy is completely underwritten by the Government of Western Australia so there’s no question at all of its financial capacity,” he said.

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A decision made in last year’s budget was to no longer subsidise Synergy’s operating losses, a move Treasurer Ben Wyatt said had partly led to the utility’s predicament.

“To a certain extent when we pulled out the operating subsidy a couple of years back, we knew there was going to be some borrowing pressures on Synergy, so we knew that was coming,” Mr Wyatt said.

“But of course the impact of solar energy, solar rooftop energy, that sort of move into the commercial space is a real challenge for Synergy, there’s no question about that.

“We are going to, I suspect, have to support it over the transition going forward.”