Retail fail, part 7
Seven energy retailers have hit the wall since the wholesale price shocks began in May 2022. The latest to fall is Elysian Energy
Maybe it's prophetic that 'Elysian' means 'related to Elysium', which is a formulation of the idea of the afterlife from Greek classical literature and mythology.
Sadly, Melbourne based Elysian Energy is now the seventh energy retailer to shuffle off to the afterlife of receivership after the most brutal wholesale pricing shock the Australian energy market has ever seen.
The energy regulations include 'Retailer of Last Resort' (RoLR) provisions for customers to automatically be transferred to a new retailer if their existing retailer unexpectedly closes or goes out of business.
Unfortunately, RoLR retailers are not the most competitively priced, but there's no need to wait for your auto-transfer and accept their price.
You can sign up to the best priced retailer of your choice, which you'll find in your most recent Bill Hero bill analysis.
Read on to find out more.
Elysian Energy was previously one of the most competitively priced retailers, but their customers yesterday, including many Bill Hero subscribers, received this email explaining that the company is now in receivership.
Seven retailers down, how many to go?
Seven energy retailers have hit the wall since the wholesale price shocks began in May 2022.
This is a very dramatic uptick since previously the industry had seen only a single retailer go out of business per year in 2016, 2017, 2018 and 2019.
|1 September 2022
|24 August 2022
|27 July 2022
|12 July 2022
|22 June 2022
|31 May 2022
|24 May 2022
We're clearly in extraordinary times for retail energy, and it's very possible that more retailers could join this list of seven casualties so far.
Bigger retailers benefit
You don't need to be the world's most skilled energy analyst to notice that it's the smaller, and usually most competitive and innovative retailers that are going out of business, while the bigger retailers survive seemingly unscathed.
One of the core enablers for this is that the smaller retailers typically need to source all the energy they sell from the wholesale market, and are exposed to the wholesale market price.
The larger tier 1 and tier 2 retailers are part of 'vertically integrated' operations, which will include both retail and generation, so they are directly producing the energy they sell, and are far less exposed to wholesale pricing shock.
Many energy consumers will already know that, say AGL and Origin, run generation assets as well as retail businesses.
It may come as a surprise to some to learn that many other retailers are part of 'vertically integrated' businesses: AGL also owns Power Direct and recently acquired Click Energy. Snowy Hydro owns both Red Energy and Lumo Energy, and Hydro Tasmania owns Momentum Energy.
Retailer of Last Resort
What actually happens when a retailer goes out of business?
Energy is an essential service and there are safeguards around continuity of supply, and continuity of billing, even in the event of an unanticipated closure of an energy retailer.
The Australian Energy Regulator (AER) or Essential Services Commission (ESC) in Victoria, can revoke a retailer's license, and transfer the customers to a new retailer, thus ensuring continuity of energy supply, and continuity of bill presentment and payment collection.
Both AER and ESC maintain a register and rules governing which retailer a customer will be transferred to under a RoLR event.
The RoLR rules in Victoria are governed by distribution zone
|VIC distribution zone
|Retailer of last resort
|Jemena, United Energy
Rest of NEM
The AER RoLR rules across the rest of the National Electricity Market (NEM) are more complicated. Retailers can submit expressions of interest and tender for the right to become a RoLR for a particular location or territory. The expressions of interest can be 'firm' or 'non-firm', and the AER supports the concept of 'default' and 'additional' RoLR retailers.
Here's a simplified list of RoLR retailers across the other NEM states outside Victoria
|Retailers of last Resort
|AGL, Origin, Energy Australia
|AGL, Origin, Energy Australia, Actew AGL
|Origin, Energy Australia, Actew AGL
|Origin, Energy Australia