Synergy posts massive loss

Stock image.
Stock image.

WESTERN Australia’s state-owned power provider Synergy has recorded a huge $656.9 million net loss in the past financial year.

It includes a $428.9 million impairment on assets and a $152.4 million onerous contract provision, Synergy said in its annual report released on Thursday.

But a $5.4 million underlying operational loss means on a cash basis Synergy was “basically breaking even”, Energy Minister Bill Johnston said.

Synergy chief executive Jason Waters said the entire net loss reflected ongoing challenges confronting an increasingly complex electricity supply environment.

“A number of factors have negatively impacted Synergy’s financial performance, including increasing fixed costs, the rapid uptake of intermittent renewable energy, in particular rooftop solar PV, and milder than expected weather conditions affecting our baseload generation,” he said.

Shadow treasurer Dean Nalder said he was very shocked to see the report and was concerned the state government had not been transparent on the issue.

“We believe this is the largest loss by a state-owned entity in WA’s history and that’s really concerning,” he told reporters.

“Every West Australian family will ultimately pay for this loss.”

But Mr Johnston said Synergy was a “business in transition”, reiterating his comments made an an estimates hearing in May that Synergy needed to confront the changed circumstances of the energy sector.

He said it was appropriate to revalue the assets to be more realistic.

“One of the main reasons that they have reduced their valuation is because this government is not going to allow the price of electricity to increase rapidly in the future,” he told reporters.

“That means the future income for Synergy is going to be less and that means their assets are valued at less.”

The state government announced in its latest state budget in May that power prices this year would increase at the rate of inflation of 1.75 per cent, equating to almost $31.