State-owned electricity utility Synergy could be on the hook for a $200,000-plus payout after Trevor James, the head of its retail arm, was overlooked for the top job in the merger with generator Verve Energy.
Just weeks before the new Synergy is due to come into effect, Energy Minister Mike Nahan quashed speculation in industry circles by announcing Verve boss Jason Waters as the entity's chief executive.
The decision, which Dr Nahan said reflected among other things Mr Waters' key role in negotiating long-term fuel contracts at Verve, came as a shock to some observers who had expected Mr James to be appointed.
With almost 40 years experience in the energy industry, Mr James is widely respected, having steered Synergy since 2011 after a difficult period in which it was plagued by problems with its billing system.
His failure to secure the job could trigger a payout clause within his contract, under which Mr James is to receive 50 per cent of his salary in the event Synergy is merged and he is not given "alternative" employment within the organisation.
According to Synergy's latest annual report, Mr James was paid $413,000 in 2012-13.
The ascension of Mr Waters, who is also highly regarded in the industry, caps a remarkable rise for the 41-year-old since he replaced Shirley In't Veld as Verve chief in May last year.
Dr Nahan said Mr Waters was the right person to lead "a corporation that will be at the forefront" of the Government's energy reforms.