Australia’s first community-owned energy retailer, Byron Bay-based Enova Energy, has been forced into voluntary administration, a victim of the ongoing domestic electricity market crisis fueled by soaring utility prices. fossil fuels.
Administrator Simon Cathro, of Cathro Partners, was appointed on Tuesday, according to an ASIC reviewwith a first meeting of creditors scheduled for June 30. Enova had more than 13,000 customers who could be transferred to another retailer under the regulator’s “retailer of last resort” mechanism.
The news comes less than a week after Australia’s energy market operator took the unprecedented step of suspending the operation of the NEM wholesale spot market, declaring it “impossible to operate” under severe conditions. increasingly chaotic prices and supplies.
The prolonged conditions of high wholesale prices, which continue under the suspension order, have been particularly difficult for small retailers, many of whom have lost customers and even asked them to turn to other suppliers to avoid paying. up to 100% more for their electricity.
There have been fears about the future of smaller retailers in the face of relentless high prices, and Enova is the most visible data victim.
In a statement on Tuesday, Enova Managing Director and CEO Felicity Stenning said the “current diabolical state of the energy market”, combined with high wholesale energy prices and price caps to customers, had made it “impossible” for the company to operate in the market.
“The market is broken and not supporting smaller retailers,” Stenning said. “In addition, the constant series of state and federal regulatory changes add to market complexity and have delayed Enova’s ability to finance and supply energy innovation.
“We strongly support the Labor Government’s swift action and the current review of energy markets. However, more emphasis needs to 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 importance that required the urgent attention of government and regulators.
“The decision of Enova’s Board of Directors to enter voluntary administration was not taken lightly and stems from the fact that the organization has been extremely challenged in recent months…particularly unprecedented activity in the wholesale energy market, including severe and sustained wholesale electricity pricing,” Taberner said. .
Based in Byron Bay, Enova signed its first client in May 2016. In three years, it has amassed more than 1,600 shareholders and created more than 20 jobs in the Northern Rivers region.
At the time of its voluntary administration, it served 13,200 customers across New South Wales and South East Queensland.
It was focused on a 100% renewable energy future and did not invest in coal, oil or gas, but instead focused on helping communities become independent of electricity. energy using their own supplies, mainly via rooftop solar power.
To that end, Enova has reinvested 50% of its profits into community-owned renewable energy projects, energy efficiency and energy education services through its nonprofit arm, Enova Community – the company said. Tuesday that this part of the business would continue to operate.
Enova has won numerous awards, including Canstar Blue’s Green Excellence Award for Energy in 2022 and first place in Greenpeace’s Green Electricity Guide 2022.
In 2017, the last time wholesale electricity prices in Australia saw a significant rise, Enova strike publicly to the greed of some of the country’s fossil fuel producers and their “game” of wholesale market prices, which at the time caused Enova to increase its consumption bills by approximately 20%.
“We are deeply disturbed by the greed of a few fossil fuel generators,” said Steve Harris, then-CEO of Enova, in a letter to customers at the time.
“This, combined with a lack of government policy regarding future renewable energy targets, has resulted in a major market failure for which electricity consumers are paying a heavy price.”
The company also has wrote a blog post this exposed the bidding practices of producers and their game in the markets, which then – as is to some extent now – driving up wholesale prices.
“It’s been widely known in the industry for a long time that a certain amount of ‘gambling’ is going on, driving up prices – which under current market rules is completely legal, even if it’s not ‘is not in the best interest of the consumer,’ the blog post said.
Just this week, former Enova chairwoman Alison Crook – who played a major role in running the business through its first six years, before stepping down at the end of the last year – wrote to state and federal energy ministers warning that small retailers were at risk. to be eliminated from the market.
“If governments do not address this problem, by the end of the crisis there will be few or no small retailers left and the government will not be able to rely on market competition to help bring down or maintain prices,” Crook wrote.
Among a series of reforms recommended to the market to support small retailers, Crook called for the declaration of a period of temporary energy supply crisis – a set of measures to help the market function and avoid the worst consequences of an unmitigated market, in particular for domestic and professional consumers.
“As part of this, steps could be taken to support small retailers and ensure their continued role in the transition to renewable energy,” Crook said.
Adrian Merrick, founder and CEO of small Melbourne-based retailer Energy Locals, said risk management was part of retailers’ job, but those risks were currently asymmetrical.
“It makes it difficult for many, especially those just starting out,” Merrick told RenewEconomy. “For example, the market maker ignores all hedges that are in place for four weeks before settlement. This creates a need for cash which can deplete a company’s ability to survive in some cases.
“Losing Enova in this current mess is such a shame,” added Merrick. “They had good passion and a great focus on the green.
“Hopefully we can work with some of the Enova team and their customers in some way to continue the good work they started.”
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