Synergy, a major electricity provider in Western Australia, has been fined $30 million for excessively raising wholesale prices.

The price rise resulted in the overcharging of thousands of customers.

The state-owned utility has been found to have inflated prices more than 11,000 times between 2016 and 2017, leading to revenue growth of $40 million to $102 million during that period. 

The Economic Regulation Authority (ERA) uncovered Synergy's market manipulation and imposed the hefty fine. 

However, rather than distributing the fine to wholesale market participants, the ERA decided that eligible households should receive a $28 credit on their next Synergy electricity bill, providing some relief to the cost of living pressures faced by consumers.

The ERA's investigation revealed that Synergy had utilised its dominant position in the wholesale market to artificially raise prices, violating market rules. 

The company employed more expensive gas prices from a long-term contract instead of cheaper options available on the market, leading to the submission of artificially high bids. 

The fine imposed by the ERA is intended to ensure that electricity generators, particularly those with market power, adhere to the market rules and maintain consistent pricing practices.

In addition to the $28 credit offered by Synergy, the state and federal governments will provide electricity credits of $500 for concession card holders and $400 for other households. 

These measures aim to alleviate the burden of rising living costs for consumers. The payments will be applied to accounts over the next few months.

Synergy has agreed to undertake an independent review to examine the internal circumstances that led to its breaching conduct and manipulative bidding behaviour. 

The company, while acknowledging the breaches, asserts that they were not deliberate and did not impact residential customers. 

Synergy has highlighted the complexity of the rules surrounding cost recovery and says it hopes to collaborate with Energy Policy WA and the ERA to reform the regulatory framework, ensuring fair compensation for energy market participants in the future.