Energy crisis: Mojo Power East collapses, 500 customers in NSW, QLD, SA impacted
Australia’s ongoing energy crisis has caused a power company to collapse, leaving 500 customers across three different states in limbo.
On Wednesday night, the Australian Energy Regulator (AER) announced it had “initiated the Retailer of Last Resort process” against Mojo Power East Pty Ltd.
It means the small retailer is unable to keep providing electricity to customers and had to disconnect them from the grid.
Customer information was passed on to the AER to make sure they didn’t go without power.
They will now be transferred to retailers such as Origin Energy and Energy Australia, “who will contact them directly to explain the new arrangements” according to the regulator.
The move has impacted 500 customers in NSW, Queensland and South Australia.
There are concerns that their electricity will now be more expensive as they go with bigger retailers.
It comes as Australia is in the throes of a power crisis, with price hikes leading to soaring wholesale prices, which have increased about sixfold since April 2021 and have made it hard for smaller companies to survive.
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Last Friday, Mojo Power warned customers that it was going to cut off supply within 72 hours.
Accordingly, this Monday the power company requested that Ausgrid disconnect those customers “as soon as practicable” after 4.15pm AEST.
By midnight Tuesday, customers had been automatically transferred to bigger retailers.
Then a day later, on Wednesday, the AER issued an official notice about the “failed retailer”.
“The AER applied the consumer safeguard after the company ceased the sale of energy to five local councils based in New South Wales,” they said on their website.
“This will ensure continuation of supply to essential services to Mojo Power East customers within these jurisdictions, including the affected local councils.”
A spokesperson told news.com.au, “The AER issues Retailer of Last Resort (RoLR) notices to ensure the continued supply of energy, ultimately to protect consumers.
“In this instance, the AER issued the RoLR as it was not satisfied that continued supply of energy by Mojo Power East (MPE) would have occurred to five local councils.”
Those councils appear to be in the Hunter Valley and Central Coast regions.
Despite the big change, the regulator assured customers that they do not have “to take any immediate action”.
They also told customers they “are under no obligation to remain with their new retailer once they are transferred”.
A special hotline has also been set up for customers on 02 6243 3065.
There were already signs that Mojo Power East was struggling. Since June, the company had closed itself to new customers.
News.com.au has contacted Mojo Power East for comment.
Rowan Wilde co-founded HelpPay, a social fintech trying to make it easier for people to pay their power bills, and warned Mojo Power East’s collapse had left customers out of pocket.
“This is a really, really disappointing outcome for Mojo Power East customers for two reasons,” he said.
“Firstly, the customers almost certainly secured a competitive deal on their energy with Mojo and believed in good faith that these prices would be honoured.
“They are now being shunted off to a retailer against their will at prices that will probably be materially higher. It's incredibly frustrating.
“But what's also frustrating is the timing. Before July 1, a large number of energy retailers were offering fixed prices for over a year to lock in customers while giving price certainty. There were some really good deals out there. Those offers are no longer available and prices are now rising.”
The whole energy sector is in crisis as rising prices mean it is no longer profitable for many smaller retailers to keep supplying power to customers.
Last month, regulators announced that the government price cap will rise by 1-9 per cent in Victoria, 7 per cent in SA, 11 per cent in Queensland and 8-14 per cent in NSW for about one in 10 households on “default market offers”.
Also last month, another energy provider went through exactly what Mojo is experiencing now.
Enova Energy also had to turn off power and pass customers onto Origin Energy and Energy Australia, but customers were angry.
A former Greens Member of the Legislative Council, Ian Cohen, had been a customer with Enova for its sustainability benefits and was frustrated to find himself a customer of one of the larger power companies, he told The Echo.
Many fixed rate plans are disappearing and at least 11 retailers are now closed to new customers in a dire sign for competition including Momentum, CovAU and Nectr, according to consumer advocacy group One Big Switch. Mojo was also one of the retailers included on that list.
Last month, news.com.au reported on Victorian energy retailer Electricityinabox sending a “blunt” email to customers urging them to jump ship as they were about to hike prices by 95 per cent.
Morgan Duncan, the CEO of Electricityinabox, told customers that “only the lazy or crazy would stay” with his company, as its rates would go up 95 per cent on July 1, almost doubling his customers’ bills.
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“We recommend you switch to a better deal today as switching is not always immediate. In some parts of Australia it can take well over a month. Act now to avoid the price hikes.”
Electricityinabox was the seventh provider to tell customers to go elsewhere, after similar statements from firms including ReAmped, LPE, Discover, Elysian and Future X.
— With Sarah Sharples
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