The Western Australian government said on Tuesday that works are underway to strengthen the reliability and security of the state's energy sector as it announced that a new contract would take effect between power retailer Synergy and energy producer Verve.

WA Energy Minister Peter Collier said that the government decided to move in to check the further financial declines of Verve, adding that the introduction of a fresh agreement between the two energy companies was a major suggestion contained in the review of the state's power industry.

The energy minister said that the previous contract that sealed the deal between Synergy and Verve was fraught with too many contending issues that rendered the latter's power facilities in idle states and effectively prevented the power company from plotting its long-term financial map.

Mr Collier admitted that the present government had inherited a problematic energy sector from the previous Labor government, which he said ripped the Western Power Corporation into separate entities that eventually led to the industry's near demise.

He recalled that the state-owned power company used to operate in profitability, citing that "in the three financial years prior to disaggregation, Western Power Corporation achieved a total profit before tax result of almost $1 billion."

And by the time the Liberal-National coalition took over from the Labor, Mr Collier said that the government was "left with the reality that a subsidy of almost $1.5 billion would be required over three years to keep Verve Energy viable."