The three regional distributors of Northpower, Great Southern Energy and Advance Energy combined for two economic reasons.

A Price Waterhouse Cooper consultant, Derek Kidley, found the required customer base for survival in the deregulated market that began at the start of the next year was 700,000. The merger of the three companies created just over 70,000 customers more than the base.

The second reason was to reduce administration as well as middle and upper management across the three companies.

There were about 2800 employees when Country Energy was born. This number included a retail business, which has since been sold.

Retail was sold to Origin Energy in March 2011. At the time that part of the business had 250 employees, many of whom worked out of the Lake Road, Port Macquarie building which is now a furniture store.

Country Energy morphed into Essential Energy at the same time. The newly-branded business had more than 4614 employees by this stage.

In 2005 the Australian Energy Regulator was formed, and in 2008 was given responsibility of NSW companies under an agreement by the Council of Australian Governments. Prior to this, Essential Energy made submissions to the Independent Pricing and Regulatory Tribunal which determined pricing.

In 2008 Country Energy delivered its 'wish list' to the AER.

Some of the items on the submission included vegetation management, streetlight replacement, substation fencing and sourcing an asset management system.

But a source within the company said there was no market testing of the costs of any of these projects, which also included replacement of service mains and the installation of reclosurers.

Previously IPART approved only part of what the company requested.

But first time around with the new regulator on the block was different: the submission was approved with no major changes.

This meant prices for consumers went up by 42 per cent, per 2010's NSW Electricity Network and Prices Inquiry, to generate the $6 billion to fund these approved projects.

A number of projects funded in the determination, however, were never delivered. Among these was $40 million for a network asset management system that was not realised, a fact the company's current chief operating officer Gary Humphreys acknowledged last week.

"While there was some initial expenditure assessing the existing systems and the most prudent use of the funding, work was suspended following the creation of Networks NSW," Mr Humphreys said.

A full review of Essential Energy's "investment program was completed and a decision was made to enhance the existing asset management system rather than replace it," he said.

A former employee, who was only able to speak on condition of anonymity, said there was "very limited knowledge" of asset management within the company.

"You'd hear a lot of 'I've worked here for 20 years and our staff know how to do it in the depot,'" the source said. "There was a lot of work done that was never intended to go anywhere, but it looked like we were developing specifications for what should have been in the system."

The former middle management staffer said the provider had morphed into a "cash cow for the government".

"It was the most mismanaged and corrupt organisation I've ever worked with.

"Too many people have their snouts in the trough."

When asked for a response to claims of corruption, a company spokeswoman asked for more detail and encouraged reporting complaints to the Independent Commission Against Corruption.

"As per Essential Energy's Code of Conduct and fraud and risk policies, we are obliged to report such allegations to both our Internal Disclosures Committee and ICAC," she said.

Mr Humphreys pointed to the company's success in having "significantly underspent on capital expenditure" during the last regulatory period. This was due to lower demand growth than forecast in some places, as well as a "wholesale review of our capital program".

But he would not be drawn on the extent of underspend. Instead, he pointed to the reduction in Essential Energy regulated asset base, which meant that "because it is now lower, customers receive lower prices in the following regulatory period".

Networks NSW boss Vince Graham has said that the AER's determination means over 1400 jobs will be cut from Essential Energy, a claim the anonymous source said was "quite devious".

"What's really happening at the moment is the determination is driving what should have happened at the time of the original merger."

Mr Graham, a smart operator with years of experience at handling the media, unions and energy employees, appeared to cast blame on former management two days after the determination was released.

"Do I wish that those who managed before had shown progressive leadership?" he asked on May 10.

"I certainly do wish that.

"I have no doubt we wouldn't be where we are today."