The Western Australian Government has announced that State-owned electricity generator Verve and retailer Synergy will be merged into a single entity.

In making the announcement, Premier Colin Barnett said the changes will deliver marked improvements in electricity delivery.

State Energy Minister, Mike Nahan, said the foist step towards the establishment of the new entity, to be known as Synergy, was to form a Board of Directors by July. After which point, legislative changes will be required to form the new Government trading entity with two ring-fenced business units by January next year.

“This merger is the first step in the process to put in place an efficient energy market that  delivers cost-effective, reliable and safe energy for all West Australians,” Dr Nahan said.

 “The State Government will also, in consultation with industry, review the market rules and the functioning and design of the Western Australian Wholesale Energy Market as well as the role of the Independent Market Operator (IMO) to identify and address existing deficiencies in the market.

 “The design and operation of the current electricity market in the South-West grid is not functioning properly and has contributed to higher electricity prices.

The plan has drawn criticism from both the WA Chamber of Commerce and the Commonwealth, with Federal Minister for Energy Gary Gray saying it is a ‘backwards step for Western Australia’ and would diminish competition in the electricity market and would drive  a price hike.  

"Competition drives down prices – there is a need for increased competition in the Western Australian electricity market, not less," he said.

"Without effective competition, electricity prices have significantly risen under the Barnett Government."