Trustpower have announced it will be closing its Whanganui-based Energy Direct NZ with the loss of 30 jobs to the city.
Staff were told the news on Friday following a consultation period.
Trustpower's commercial operations general manager Chris O'Hara said he expected the operation to close in October while EDNZ customers will be transferred to Trustpower in the coming weeks.
The company bought EDNZ from the Whanganui District Council in 2013 for $13.7 million because it wanted a second-brand at the lower end of the market.
WDC had separated Wanganui Gas into two trading units - the retail arm EDNZ and gas reticulation GasNet - and decided to sell EDNZ to pay off debt.
Mr O'Hara said at the time Trustpower had every intention to keep it as a separate entity operating out of Whanganui but the New Zealand market had changed since 2013.
Competition had increased over the past two years and there were now 26 retail electricity brands in the country, he said.
"Frankly that's ridiculous for a market of only 1.5million households and I seriously doubt that the majority of these small players will develop a sustainable business."
Mr O'Hara said even if council had retained ownership, amalgamation would have been inevitable.
"Council has been nothing but supportive since we acquired EDNZ and there is nothing they could've done to change the outcome," Mr O'Hara said.
"It is simply the result of the way the New Zealand market has evolved."
He said it was easier for companies to compete by offering energy and power, gas, broadband and phones packages which would be offered to EDNZ customers.
Mr O'Hara said it would be a tough time for EDNZ staff but acknowledged their hard work and commitment.
"There's always a mix of reactions and emotions," he said. "It's probably fair to say that some staff have been expecting this and other staff haven't."
Mr O'Hara said there would be some employment opportunities for EDNZ staff at Trustpower's Tauranga and Oamaru operations and it would also work with local employers and Ministry of Social Development to find new jobs for staff.
The EDNZ redundancies come two months after the loss of 68 Whanganui jobs at Cavalier Spinners.
Whanganui mayor Annette Main said it was a disappointing decision but understood it was a difficult market EDNZ was operating in.
She had tried to convince Trustpower to stay.
"I did try. I always try to get them to think about the impact on places like Whanganui. Sometimes it feels like we make one step forward and one step back," she said.
Part of the council sale of EDNZ to Trustpower was an obligation to keep the Whanganui operation for two years.
"We kind of thought after two years they'd find out what a wonderful group of people they've got there and they would find a way to keep that in Whanganui. It's pretty disappointing that hasn't happened,' Ms Main said.
"I understand they are working with staff to find them other positions or help them find other positions in Whanganui."
Whanganui and Partners has also offered to help EDNZ staff find other employment.
Despite the loss of EDNZ from Whanganui Ms Main still backs council's sale of it.
"I still think it was the right thing to do at the time," Ms Main said. "It was a joint decision the council voted for unanimously and we did it for all the right reasons.
"At the time it was a very good offer that was made and it's worked well to apply the income from the sale to debt," she said. "It was a risky business to be in."
In a 2009 referendum 68 per cent were opposed to the sale of EDNZ with 28 per cent favouring a sale. The rest were unsure.
Meanwhile, Trustpower would contact EDNZ customers individually about the switch. They would also have their prices fixed for 12 months.