Power retailer blames ‘diabolical’ market for collapse
Byron Bay based Enova, which branded itself as Australia’s first community-owned electricity retailer, has called in administrators.
Byron Bay junior electricity operator Enova Energy has collapsed, with its chief executive slamming the “diabolical” state of the energy market as broken and unable to support small retailers amid soaring prices.
Enova, which branded itself as Australia’s first community-owned electricity retailer, was placed into voluntary administration on Tuesday morning after failing to seal wholesale energy price hedging after a deal with Melbourne’s Diamond Energy lapsed. A cap imposed on customer pricing also led to the business no longer being financially viable.
The shutdown of Enova marks the third retailer to fold amid a national energy crisis which has seen the electricity market suspended, price caps imposed and the threat of blackouts due to a lack of power generation being available.
Enova, which had 13,200 customers across NSW and south-east Queensland, blamed chaotic market conditions.
“The current diabolical state of the energy market, combined with the high wholesale market energy prices and the cap on customer pricing, has made it impossible for Enova Energy and many other small retailers to operate in the market,” Enova chief executive Felicity Stening said.
“The market is broken and does not support small retailers. In addition, the constant raft of State and Federal Government regulatory changes is adding to the market complexities and have caused Enova delays in being able to fund and resource energy innovation.”
Major gas retailer Weston Energy closed its doors on May 23, sparking a rush among big manufacturers to find replacement supply contracts at inflated prices. Electricity retailer Pooled Energy, co-founded by Worley chair John Grill, appointed administrators a week later due to high wholesale prices hitting its operations.
Enova was one of several smaller retailers which campaigned for Powershop customers to join its green community offering after oil and gas giant Shell swooped to buy the company in November 2021, saying it was now in the “hands of an emitter on a global scale.”
Turbulent market conditions and a five-fold jump in wholesale prices has challenged the business models of smaller retailers, with many struggling to pay money to cover their exposure to the price jump.
A number of second-tier retailers are struggling with the tough market conditions. Queensland’s LPE, with over 20,000 customers, told customers in May to find an alternative supplier while the Sydney-based Discover Energy, co-founded by young Rich Lister Anson Zhang, also said it would have to nearly double rates for some customers due to an “unprecedented increase” in the cost of wholesale electricity.
ReAmped Energy - which had 70,000 customers - also told customers to find another provider.
Energy companies face a probe from the consumer watchdog to investigate any price gouging and anti-competitive conduct amid a rolling power crisis, with a report to be handed to energy ministers by July after a five fold increase in wholesale electricity prices.
Enova said it backed moves by federal Labor to review the industry but said more needed to be done for smaller retailers.
“We are very supportive of the Labor Government’s fast action and current review of the energy markets. However, there needs to be greater emphasis on the plight of retailers,” Ms Stening said.
The renewables-based Enova, which started operations in 2016, was owned by 1600 community shareholders, said it reinvested half of its profits back into Australian communities.
Enova Community Energy chair John Taberner called for government action to address the energy crisis.
“The energy crisis is a matter of national significance that requires the urgent attention of government and regulators,” Mr Taberner said.
“Enova Board’s decision to enter voluntary administration has not been taken lightly and comes as a result of the organisation being extremely challenged in recent months by external factors, specifically the previously unseen activity on the wholesale energy market including severe and sustained wholesale electricity pricing.”
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