Price fear over power merger

Australia's competition watchdog savaged the tie-up between State-owned power utilities Verve and Synergy before their re-merger as anti-competitive and bad for consumers.

But the Australian Competition and Consumer Commission buckled to a request from WA Energy Minister Mike Nahan to "defer" a press statement that outlined the concerns and they were not made public.

The revelations are in letters between the ACCC and Dr Nahan in which the regulator said a merger between generator Verve and retailer Synergy would give the new entity too much power.

The Opposition obtained the letters through Freedom of Information laws and accused the ACCC of failing in its duty to consumers by hiding its concerns.

The ACCC fears arose after the boards of the utilities were merged in July last year but before the full merger on January 1.

In the first letter on October 11, ACCC chairman Rod Sims said the merged utility, now known as Synergy, would have undue market power and could exploit this at the expense of rivals.

Mr Sims said the move would also make it harder for private companies to enter the market or expand within it, increase the risks for those already operating and reduce transparency.

This would push up prices and ultimately households and businesses would pay more.

Mr Sims concluded the letter by saying the ACCC would issue a press release on the matter. However, the release was not issued after Dr Nahan wrote back four days later saying it would be "premature and inappropriate".

Noting the ACCC had yet to consider "competition measures" proposed to offset effects of the merger, Dr Nahan asked for the press release to be deferred.

Shadow energy minister Bill Johnston said the ACCC's failure to outline its concerns publicly raised serious questions about why it put the requests of Dr Nahan ahead of consumers. He also said Dr Nahan's request suggested he wanted to shelter the merger from scrutiny.

Mr Johnston noted the ACCC believed the merger would push up costs, which undermined the Government's justification for it.

The ACCC declined to answer questions about why it did not publicly outline its concerns, instead saying the merger did not breach relevant laws.

Dr Nahan said once the ACCC became fully aware of the merger process, it and the energy industry were comfortable with it.

The West Australian

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