❓ Mr. Nalder questions the Minister for Energy on the Synergy and Verve re-merger. The Minister defends the merger, highlighting cost savings and criticising the previous Labor government's energy policies.
AnsweredQoN 20Legislative Assembly
QuestionView source ↗
SYNERGY AND VERVE — RE-MERGER
20. Mr D.C. NALDER to the
Minister for Energy:
Can the minister update the house —
Mr W.J. Johnston interjected.
The SPEAKER :
Member for Cannington, I call you to order for the second time.
Mr D.C. NALDER :
Can the minister update the house on the merger of Synergy and Verve that
occurred on 1 January this year?
20. Mr D.C. NALDER to the
Minister for Energy:
Can the minister update the house —
Mr W.J. Johnston interjected.
The SPEAKER :
Member for Cannington, I call you to order for the second time.
Mr D.C. NALDER :
Can the minister update the house on the merger of Synergy and Verve that
occurred on 1 January this year?
AnswerView source ↗
I thank the member for the question, which is a very
important one. This is an issue that dominated last year's activities
in Parliament and I am pleased to announce that, as planned, on 1 January 2014
the merged entity was formed—the new Synergy. I will first congratulate
the merger implementation team led by Peter Oates. He had a difficult job on a
short time line to put in very complex legislation and structure, and to
interact very extensively with the private sector. I also thank the staff and
management of Synergy and Verve, and now the new Synergy, for their cooperation
and effort—it was a sterling effort. I would also like to congratulate
Jason Waters, the new chief executive officer of the combined entity. As many
members will now, he was previously the CEO of Verve. I will shortly release a
document that outlines the business case for the merger, as I committed to
during the debate. It will show substantial net savings from the merger and
illustrate that it was a necessary first step in reforming Labor's
failed electricity disaggregation. If the member for Alfred Cove wants to see
the costliness of Labor's dalliance in electricity reform, he should
look at the mid-term review, in which the total subsidy for Synergy–Verve
is $493 million—up by $100 million.
Mr W.J. Johnston interjected.
The SPEAKER :
Member for Cannington, I call you to order for the third time.
Dr M.D. NAHAN : It
is $493 million this year—$2 billion over the forward estimates. I
might add this is despite increasing, on our policy—the member for
Cannington called us weak—the price of electricity by nearly 80 per
cent. Despite that, we have large haemorrhages in costs. The people opposite
criticised us for this merger—vocally, virulently and loudly. They said
it was friendless. I understand that there are a large number of concerns by
private sector operators. They were worried about competition; that is, the new
merger would be dominant. I am pleased to say that most of them now, because of
the way we have gone about it, have actually increased the competitiveness in
the sector by allowing and enforcing the combined entity to sell electricity to
the private sector at competitive rates and open its entity up to competition.
I also know why many of the firms—in
the debate, I indicated this—would not want it. It is because they had
a dream run under Labor. Labor's system had the state underwrite, in a
very risky market, private sector investment. Basically, private sector people
got a free ride competing with Verve. Synergy signed fixed-price, minimum-take
contracts whereby the state underwrote the whole electricity industry. As many
people know, the electricity industry has it pretty hard because of our decline
in consumption; it is not an area that is very profitable. Therefore, all the
losses in the industry are borne by the state and taxpayers. That is Labor's
contribution to this —
Several members interjected.
Dr M.D. NAHAN : It
is one that I hold —
Mr B.S. Wyatt interjected.
The SPEAKER :
Member for Victoria Park, I have been pretty patient with you. I call you to
order for the second time.
Dr M.D. NAHAN :
Besides WA Inc back in the 1990s, this will prove to be the largest, most
costly policy debacle in this state in recent times. I look forward over the
next year to pointing this out repeatedly and holding members opposite
accountable for it.
I also committed to undertake a review of the wholesale
market, and I will be making statements on this. The merger was a necessary
first step, but there are many steps to come.
important one. This is an issue that dominated last year's activities
in Parliament and I am pleased to announce that, as planned, on 1 January 2014
the merged entity was formed—the new Synergy. I will first congratulate
the merger implementation team led by Peter Oates. He had a difficult job on a
short time line to put in very complex legislation and structure, and to
interact very extensively with the private sector. I also thank the staff and
management of Synergy and Verve, and now the new Synergy, for their cooperation
and effort—it was a sterling effort. I would also like to congratulate
Jason Waters, the new chief executive officer of the combined entity. As many
members will now, he was previously the CEO of Verve. I will shortly release a
document that outlines the business case for the merger, as I committed to
during the debate. It will show substantial net savings from the merger and
illustrate that it was a necessary first step in reforming Labor's
failed electricity disaggregation. If the member for Alfred Cove wants to see
the costliness of Labor's dalliance in electricity reform, he should
look at the mid-term review, in which the total subsidy for Synergy–Verve
is $493 million—up by $100 million.
Mr W.J. Johnston interjected.
The SPEAKER :
Member for Cannington, I call you to order for the third time.
Dr M.D. NAHAN : It
is $493 million this year—$2 billion over the forward estimates. I
might add this is despite increasing, on our policy—the member for
Cannington called us weak—the price of electricity by nearly 80 per
cent. Despite that, we have large haemorrhages in costs. The people opposite
criticised us for this merger—vocally, virulently and loudly. They said
it was friendless. I understand that there are a large number of concerns by
private sector operators. They were worried about competition; that is, the new
merger would be dominant. I am pleased to say that most of them now, because of
the way we have gone about it, have actually increased the competitiveness in
the sector by allowing and enforcing the combined entity to sell electricity to
the private sector at competitive rates and open its entity up to competition.
I also know why many of the firms—in
the debate, I indicated this—would not want it. It is because they had
a dream run under Labor. Labor's system had the state underwrite, in a
very risky market, private sector investment. Basically, private sector people
got a free ride competing with Verve. Synergy signed fixed-price, minimum-take
contracts whereby the state underwrote the whole electricity industry. As many
people know, the electricity industry has it pretty hard because of our decline
in consumption; it is not an area that is very profitable. Therefore, all the
losses in the industry are borne by the state and taxpayers. That is Labor's
contribution to this —
Several members interjected.
Dr M.D. NAHAN : It
is one that I hold —
Mr B.S. Wyatt interjected.
The SPEAKER :
Member for Victoria Park, I have been pretty patient with you. I call you to
order for the second time.
Dr M.D. NAHAN :
Besides WA Inc back in the 1990s, this will prove to be the largest, most
costly policy debacle in this state in recent times. I look forward over the
next year to pointing this out repeatedly and holding members opposite
accountable for it.
I also committed to undertake a review of the wholesale
market, and I will be making statements on this. The merger was a necessary
first step, but there are many steps to come.
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