Australia’s first community-owned energy trader, Byron Bay-based Enova Energy, has been forced into voluntary governance, a victim of the ongoing crisis in the national electricity market fueled by the rising cost of fossil fuels.
Administrator Simon Cathro, of Cathro Partners, was appointed on Tuesday an ASIC messagewith a first meeting of creditors scheduled for June 30. Enova had more than 13,000 customers who could be switched to another retailer under the regulator’s “retailer of last resort” mechanism.
The news comes less than a week after the Australian energy market operator took the unprecedented step to suspend operation of the NEM’s wholesale spot market, declaring it “impossible to operate” under increasingly chaotic pricing and delivery conditions.
The extended terms for high wholesale prices, which continue under the suspension order, have been particularly hard on small retailers, many of whom have sold customers and even asked them to move to other suppliers to avoid paying up to 100% more for their power.
There are fears for the future of small retailers in the face of continued high prices, and Enova is the biggest victim of data.
In a statement on Tuesday, Enova director and CEO Felicity Stenning said the “current diabolical state of the energy market,” combined with high wholesale energy prices and cap on customer prices, had made it “impossible” for the company to enter the market.
“The market is broken and doesn’t support small retailers,” Stenning said. “In addition, the constant flow of regulatory changes from the state and federal government is adding to the complexity of the market and has caused Enova delays in financing and using energy innovation.
“We fully support the Labor government’s swift action and the current review of energy markets. However, more emphasis should be placed on the plight of retailers.”
John Taberner, president of Enova Community Energy, said the east coast energy crisis was a matter of national concern that needed urgent attention from the government and regulators.
“The decision of Enova’s board of directors to become a voluntary board member has not been taken lightly and comes as a result of the organization being extremely challenged in recent months… particularly the previously unseen activity in the wholesale energy market, including strict and sustained wholesale electricity prices,” Taberner said.
Headquartered in Byron Bay, Enova signed its first client in May 2016. Within three years, it had gathered more than 1,600 shareholders and created more than 20 jobs in the Northern Rivers region.
At the time of voluntary administration, it served 13,200 customers in New South Wales and South East Queensland.
It focused on a 100 percent renewable energy future and did not invest in coal, oil or gas, but rather focused on helping communities become energy independent using their own resources, mostly through solar on the grid. roof.
To that end, Enova reinvested 50% of its profits in renewable energy projects, energy efficiency and community energy education services through its nonprofit branch, Enova Community — the company said Tuesday it will continue to operate this part of the business.
Enova has won numerous awards, including Canstar Blue’s Green Excellence Award for Energy in 2022 and number one in Greenpeace’s 2022 Green Electricity Guide.
In 2017, the last time Australian wholesale electricity prices jumped significantly, Enova lash out in public due to the greed of some of the country’s fossil fuel producers and their “gaming” of wholesale prices, Enova increased its consumer bills by about 20 percent during that time.
“We are deeply troubled by the greed of a few fossil fuel generators,” Steve Harris, then CEO of Enova, said in a letter to customers at the time.
“This, along with a lack of government policies around future renewable energy targets, has led to a major market failure for which electricity consumers have to pay a high price.”
The company too wrote a blog post that highlighted generators’ bidding practices and their play in the markets, which then – as to some extent now – drove wholesale prices up.
“It has long been well known in the industry that there is a degree of ‘gaming’ going on that drives up prices – which is perfectly legal under current market rules, even if it is not in the best interests of consumers,” the spokesperson said. . said blog.
Just this week, Enova’s former chairman, Alison Crook — who was instrumental in leading the company through its first six years before stepping down late last year — warned state and federal energy ministers that small retailers were at risk. be eliminated from the market.
“If governments don’t address this issue, by the end of the crisis there will be few, if any, small retailers left and governments will not be able to rely on market competition to help push or squeeze prices,” Crook wrote.
In addition to a series of recommended market reforms to support small retailers, Crook called for the promulgation of a temporary energy supply crisis – a package of measures to help the market function and avoid the worst effects of a rampant market, especially for household and business consumers.
“Within this framework, steps can be taken to support small retailers and ensure their continued role in the transition to renewable energy sources,” Crook said.
Adrian Merrick, the founder and CEO of Melbourne-based small retailer Energy Locals, said managing risk is part of the job of retailers, but these risks are currently asymmetric.
“This makes it challenging for many, especially those who are in the early stages,” Merrick told RenewEconomy. “For example, the market party ignores all hedges that are four weeks before settlement. This creates a cash flow requirement that in some cases can reduce a company’s survivability.
“Losing Enova to this current mess is a real shame,” added Merrick. “They had a good passion and a big green focus.
“I hope we can somehow work with some of the Enova team and their customers to continue the good work they have started.”
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