Small power retailers LPE, Discover Energy urge customers to switch to Energex or Ergon

Thousands of households have been hit with huge power bill hikes and been told to switch providers sparking fears some smaller energy firms could collapse.

Small power retailers are hiking electricity bills, sparking concern that second tier operators could collapse as customers leave.

Thousands of households have been slugged with a doubling of power prices after retailers passed on surging costs, sparking fears some operators may collapse under the weight of volatile market conditions.

Queensland’s LPE, with over 20,000 customers, said it was strongly encouraging customers to find alternative suppliers following its decision to increase charges by over 100 per cent on June 1.

“Within the next 24 hours, we strongly encourage you to seek an alternative supplier,” LPE chief executive Damien Glanville said in a letter to customers seen by The Australian, telling them to switch to either of the big players in Ergon or Energex.

“We understand the financial pressures families are current facing and we did not want to have to materially increase our prices which would have added to this stress.”

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.

The huge price jumps among the second-tier retailers will stoke broader concerns that smaller Australian electricity operators could follow the fate of UK retailers where nearly 30 energy companies have collapsed after failing to hedge against rising wholesale costs.

Discover blamed volatility in Europe and Covid ructions.

“The unprecedented events in Europe and the knock-on effects of Covid-19 have resulted in wholesale energy prices increasing by more than 140 per cent over the past year. This impacts the entire industry and has meant that many energy retailers, including ours, have been left with no choice but to increase household energy consumption rates accordingly,” Discover co-founder and co-chief executive Jeff Yu said.

The Sydney-based retailer which operates in NSW, Victoria, South Australia, Queensland and ACT called on the federal government to subsidise prices given the growing crisis unfolding.

“At a time when consumers are already feeling the pinch around the rising cost of living, this issue needs to be addressed. We’re calling on the Government to look at ways to subsidise and stabilise these unsustainable wholesale energy costs in a similar way that they have for motorists at the pump. As soon as prices are reduced, our customers can rest assured that we will pass on those reductions,” Mr Yu said.

Wholesale electricity prices jumped by 141 per cent in the March quarter from the same period a year earlier. A series of coal outages spanning Victoria, NSW and Queensland have contributed to pressures with electricity stations including AGL’s Loy Yang A, NSW’s Vales Point and Queensland’s Callide all running below capacity.

A spike in coal and gas prices, exacerbated by tight global markets following Russia’s invasion of Ukraine, have also contributed to tight conditions in the market.

LPE said it had never seen such volatile conditions in the market.

“If you’re a small energy consumer in Queensland right now, you’re about to see your energy prices double,” Mr Glanville told The Australian.

“Small businesses are going to struggle and if you’re a commercial and industrial customer right now and you’re going to the market to get energy, some of them are just saying we can’t afford this energy and we are going to shut down.”

Small Australian retailers face collapse, price comparison service One Big Switch said.

“The UK had a 54 per cent increase in the government price cap in April and two dozen retailers have gone under,” said Joel Gibson from One Big Switch.

“Power prices are now the number issue in the UK‘s cost of living crisis. Australia’s starting to look like we could be next.”

Mr Gibson said another retailer ReAmped emailed some NSW customers last week to notify them that usage rates were rising by 43 per cent, increasing an annual bill by around 28 per cent or $273 for a typical home.

“We’re going to see more and more price hikes over the coming weeks and we can only hope they’re not all at this level,” Mr Gibson said.

Originally published as Small power retailers LPE, Discover Energy urge customers to switch to Energex or Ergon