Five local councils have been abandoned by their chosen electricity supplier after the company stopped selling them power and asked Ausgrid to disconnect them from the grid.
The Australian Energy Regulator initiated a Retailer of Last Resort process for Mojo Power East Pty Ltd this week, after the company ceased the sale of energy to Central Coast, Maitland, Muswellbrook, Upper Hunter and Cessnock councils.
The Retailer of Last Resort process allows the transfer of customers to other retailers to ensure the continued supply of energy. About 500 customers were affected.
Mojo Power East notified its customers last Friday of a cessation of supply to take effect within 72 hours. That was followed by Mojo Power East asking Ausgrid to disconnect those customers as soon as possible after 4.15pm on Monday.
The regulator said it issued the Retailer of Last Resort "as it was not satisfied that continued supply of energy by Mojo Power East would have occurred to five local councils".
"These councils are responsible for supplying essential services within their relevant communities, including emergency services and aged care residential facilities," an Australian Energy Regulator spokesperson said.
The Herald reported this month that the five councils plus Lake Macquarie signed a 10-year deal with Mojo Power in January, but the company had tried to pull the plug on the contract after volatility in the energy market.
Mojo Power and Mojo Power East are owned by parent company iON Holdings. Neither Mojo nor Mojo East responded to requests for comment.
Central Coast council told the Herald last week it expected its contract with Mojo Power East to be honoured to full term, but now says it "anticipated the possibility of its supplier defaulting on its obligations".
"As a result council included a contingency in its budget to allow for energy prices at market levels, which are much higher than its current contract," a council spokesperson said. "Council will remain with the Retailer of Last Resort (Energy Australia) while it investigates its options as a result of this dispute. This may include seeking an alternative retail electricity provider."
Upper Hunter council provided a similar statement. It likewise said it would remain with its Retailer of Last Resort, Energy Australia while it explores its options for future power supply.
Muswellbrook and Maitland councils are also being serviced by Retailers of Last Resort and will discuss ongoing supply of power at their next council meetings.
Cessnock council could not be reached for comment.
Lake Macquarie council said it had not been affected by the recent situation as it is supplied by Mojo Power, rather than Mojo Power East, but that it was continuing to monitor the situation carefully.
Despite declaring Mojo Power East a "failed retailer", the Australian Energy Regulator has not revoked the business's electricity retailer authorisation. The regulator did not answer why it chose not to do this, but said it was "actively considering" it.
"The AER will continue to closely monitor both the wholesale and retail markets to ensure all market participants are complying with the law and the rules, and take necessary action when misconduct is uncovered," the regulator spokesperson said.
