WA power provider Synergy will post almost $180 million in losses over the next four years as the financial position of the state-owned utility deteriorates.

Key points: Synergy is grappling with a flood of renewable energy undercutting its plants

Synergy is grappling with a flood of renewable energy undercutting its plants The Gorgon gas project has saddled the power retailer with high gas costs

The Gorgon gas project has saddled the power retailer with high gas costs A budget decision to limit power price rises to 1.75 per cent has also hit finances hard

Figures released in State Parliament show Synergy is forecast to slide into the red from the 2020-21 financial year, when it is expected to rack up a $66 million loss after tax.

The hit to Synergy's bottom line is expected to blow out further across the remaining budget out-years, with deficits of $66 million and $47 million forecast for 2021-22 and 2022-23 respectively.

Although no figures were provided for 2019-20, it is believed Synergy is forecasting a small profit.

The size of Synergy's forecast losses, which tally up to $179 million over three years, highlight the extent to which the electricity producer's financial health is ailing.

Undercut by renewable energy

Last month, Energy Minister Bill Johnston confirmed Synergy was expected to crash to a loss as it grappled with a flood of renewable energy that was undercutting its fleet of coal and gas-fired power plants.

But the utility is also under pressure from a long-term contract with the operators of the massive Gorgon gas project that has saddled the provider with high gas costs.

A contract with Chevron's Gorgon gas project has not helped Synergy's bottom line. ( Supplied: Chevron )

These difficulties were made worse when the McGowan Government opted to limit household power price rises to just 1.75 per cent in the May Budget.

The decision widened the gap between the price Synergy receives for its electricity and costs of producing it.

Synergy no longer receives an operating subsidy from the Government for its operating losses, meaning the corporation will have to run down its cash reserves to help fund spending.

It will also be required to borrow up to $140 million across the forward estimates to pay for capital spending such as new plants or equipment.

Synergy admits difficult time ahead

A Synergy spokeswoman acknowledged the deterioration in the utility's trading position, saying its profitability had been hit by a range of factors.

Four of Synergy's nine executives have departed amid its falling performance. ( ABC News )

Chief among them was the rapid uptake of rooftop solar power by households and, increasingly, businesses looking to take advantage of subsidies and reduce their power bills.

The spokeswoman indicated Synergy was also being stung by high fuel costs, in a nod to the Gorgon contract, which is worth billions of dollars over its life.

She said although the utility was forecasting trading conditions to remain difficult across the forward estimates, it would try to minimise its exposure as much as possible.

"The rapidly changing market in which Synergy operates … is likely to continue to place pressure on Synergy's financial performance over the forward estimates period," she said.

"Synergy's profit forecast has been impacted by the lower residential electricity tariff price path announced in this year's Budget and an increase in network charges from Western Power that have not been passed on to customers in the franchise market.

"Synergy will endeavour to respond to these challenges through Government-approved initiatives, cost management and contractual arrangements where appropriate."

Mr Johnston's office referred questions about Synergy's finances back to the utility.

Executive clear-out

The revelations come at a tumultuous time for Synergy after it emerged last week that four of the group's nine executives were set to depart over coming months.

WA energy expert Ray Wills said the corporation was being squeezed on multiple fronts, with its revenues taking a hit from the influx in solar and wind power flowing into the grid, but with its high cost base relatively fixed.

Synergy's revenues have been hit by the rise of solar and wind power. ( ABC News: Sarah Tallier )

Professor Wills, whose private company is pushing for a $160 million solar farm in the Wheatbelt that would compete with Synergy, said the utility was facing a prolonged period of pain.

"There's no doubt globally utilities are suffering from changes in the way energy is generated," he said.

"Our electricity sources are changing to renewables and that's actually providing new opportunities for new businesses to enter the market, so therefore there's competition.

"Competition should be good for the market, it should actually bring pricing down.

"However if your cost structure is not as flexible, then clearly you're going to bear some burden of those competitors coming in and taking market share."

Synergy admits conditions will remain difficult as the utility tries to rein in the losses. ( ABC News: Natasha Johnson )

Professor Wills suggested there was a growing case for a revamp of WA's household electricity price structures, to ensure people were charged according to how much strain they put on the grid at peak periods of demand.

The Government has launched a review of WA's electricity system through its Energy Transformation Initiative in a bid to lay out a roadmap for the industry.