"I'm confident we've done the right thing by pulling out."
Smooth switchover
Contact, already the country's second-largest energy retailer, said there will be no loss of supply for energyclub's 11,600 customers, who will be switched onto one of its standard plans with no fixed term and no break fees. They will then be free to choose whatever Contact plan they wish to remain on.
No price was disclosed for the purchase which will take Contact's electricity customer base to about 423,800 accounts, according to Electricity Authority data.
Contact shares rose 0.5 per cent to $6.42, trimming their loss so far this year to 10 per cent.
Energyclub had been the third-fastest growing retailer after Electric Kiwi and Vocus. Flick Electric, 70 per cent-owned by Z Energy, had led the new-entrant players until 2017 when periods of sustained high wholesale prices started making its spot-based model unattractive.
Average daily wholesale power prices surged to more than $300 a megawatt-hour late last month and twice last week amid a combination of low wind generation, cold weather, low North Island lake levels and plant outages. Those are the highest prices since November 2018.
National grid operator Transpower earlier this month noted that North Island hydro storage was at a six-year low, while South Island storage was also declining. Consultancy Energy Link last week said South Island inflows in the preceding four weeks were the 16th lowest in records going back to 1931. North Island inflows were the third-lowest for the same period.
Wholesale woes the main driver
Goadby said the firm. which billed weekly, saw the impact Covid-19 was having on its customers. While that was a consideration in his decision, the on-going issues with the wholesale market was the main driver.
He noted that energyclub had withstood the high wholesale power prices caused in late 2018 and last year by outages at the Pohokura gas field, and earlier this year when Transpower was upgrading the high-voltage link between the North and South Islands.
But he said he had no confidence that normality was going to return to a market in which independent retailers were disadvantaged against retailers with their own generation.
That is compounded by the position of Meridian Energy, which he said gets to increase wholesale power prices whenever it calls on back-up supplies from Genesis Energy's dual-fuel Huntly plant under the pair's "swaption" agreement.
"When that swaption is called your costs will roughly double," Goadby said of the impact on the market's independent retailers.
In a joint statement with Contact, Goadby said his firm approached Contact chief executive Mike Fuge last week. Agreement had been easy to reach.
"We've found them to be customer-focused, fair, straight up and easy to deal with. Contact is the best retailer to look after our customers in terms of service, pricing and stability," Goadby said.
Stuff stake
Energyclub started business in mid-2017. In October that year the Fairfax media group – now trading as Stuff – acquired a 49 per cent stake as part of its broader strategy at the time of adding complementary services for its readers and subscribers.
After increasing its stake to 57 per cent Stuff then sold it back to the former management effective May 1. Stuff, itself on the market at the time, also sold its fledgling broadband business Stuff Fibre to Australian-owned Vocus.
Energyclub sold power on 22 of the country's 29 electricity distribution networks, but more than half its customers were in Auckland, Wellington and Christchurch.
Goadby said the business, which saw its revenue go from zero to $20 million, will wind down in coming weeks.
The firm has the equivalent of 14 full-time staff spread around the country, all of whom work from home. He said the customer service they provided had been excellent and he didn't expect any problems finding other jobs for them.
