Yahoo Finance Energy crisis: Enova goes into voluntary administration
Byron-Bay-based community-owned energy retailer Enova Energy has been forced into voluntary administration as small energy companies struggle to survive the turmoil in Australian energy markets.
Enova is the latest victim of soaring costs of electricity and gas wreaking havoc on the National Electricity Market.
Several other small retailers have been struggling to weather the power crisis, with a number of companies urging their customers to switch to other retailers or face massive price hikes, with one retailer increasing its prices by 285 per cent.
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Some companies have also stopped taking new customers.
The chaos in the energy market forced the Australian Energy Market Operator to suspend the National Electricity Market temporarily last week, although the market operator has today confirmed the staged return to normal operations.
Enova managing director and CEO Felicity Stenning said the state of the market, high wholesale energy prices and the cap on customer pricing had made it “impossible” to operate.
“The market is broken and does not support small retailers,” Stenning said.
“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.”
Some of Enova’s energy came from its customers’ rooftop solar, with the rest from Victorian-based retailer Diamond Energy.
According to the company, when its fixed-priced arrangement with Diamond Energy came to an end, it was unable to secure another agreement, which left it exposed to the inflated wholesale prices.
What does this mean for Enova Energy customers?
Enova Energy is a first-of-its-kind, community-owned energy supplier formed by local residents of the Northern Rivers region in NSW.
The company focuses on providing clean energy to its customers and, as a social enterprise, 50 per cent of its profits are invested in clean energy and energy-efficiency projects.
For the company's 13,000 customers, the possibility of collapse could see them switched to another retailer in their area.
Known as the “retailer of last resort” mechanism, Joel Gibson from One Big Switch said customers were not in danger of having their energy cut off in the event their power company went under.
He said, however, that customers may end up on the worst plan with a new retailer, so they would be wise to switch to a more competitive plan.
Gibson has also said that losing smaller retailers could result in a less competitive energy market, which could lead to higher prices for customers.
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