Kate Farrar, managing director, QEnergy
Kate Farrar QEnergy MD
What is QEnergy?
QEnergy is a Brisbane-based energy retailer specialising in servicing small businesses. We have 17,500 customers, mainly in Queensland and NSW, but we recently entered the Victorian and South Australian markets. Victoria is growing particularly strongly. I’ve been managing director since the business started operating in 2009 with two of us — we now have 60 people. Our big three competitors are AGL, Origin Energy and Energy Australia. Our turnover is more than $100 million.
Who owns it?
QEnergy is a privately owned company with about 80 shareholders. The ASX-listed private
equity firm, Blue Sky Alternative Investments, owns 25 per cent and I have a stake of about 5 per cent. Our chairman is Steve McRae, the former chief executive of Energex.
How did you start your career?
I was born in Sydney and got the award for having the highest mark of any female in the
NSWHigher School Certificate in 1984. My first
love was music so I did a bachelor of music at the
University of Sydney. When I finished, I thought I should probably do something that people would pay me for. So I went into the bondmarkets and was a trader for 10 years with NSWTreasury Corporation and ABN Amro. My mother said I should get a degree in business, so I did a master
of commerce at the University of NSW. I came to Brisbane in 1996when I was offered a job as
head of fixed interest with Suncorp Investment
How did you get into the energy business?
About 15 years ago, when the electricity market started deregulating, it looked like a very exciting market from a trader’s perspective. I got a job running the retail operations of Ergon Energy, the second-largest energy retailer in Queensland, which was then owned by the Queensland government. I spent eight years there and we built up a fantastic customer base. While I was there, Ergon bought Powerdirect Ltd, a small energy retailer, for $103 million. A year later, in 2007, we sold the whole lot to AGL for $1.2 billion. Later on I was approached to join QEnergy by the board.
How has it been building up a business from scratch?
There is no question you need different skills to build a business fromthe ground up than you do to work in a corporate environment. That has been something I have had to work through. You
need to focus on cashflow with small businesses.
In building a business, the company goes through different stages. You have to transition the company from the start-up stage, where the company has nothing but prospects, to an established business which is medium sized, and then work through the next phase to make sure all your systems and processes are in place for a larger organisation. When you are a larger business, you have to manage your stakeholders and it becomesmore of a corporate environment.
What is the electricity industry like at the moment?
It is an industry in a state of flux. We have seen the imposition of the carbon tax and its likely abolition. We have seen a shift at the federal and state levels towards ensuring that renewable energy supplies are supported within the grid.
We have seen a transfer of control away from the industry towards the customer with things like solar panels which allow people to generate electricity in their own homes. At the
same time, we have seen a significant increase in the price of electricity, which is partly due to the need for a catch-up from under-investment in the past and partly due to the move towards decarbonisation of the industry.
There have been a lot of changes in the government regulation of the industry. How is the industry coping?
It would be fair to say that anyone involved with the electricity industry really wants regulatory stability, whether you are working on the “black” energy side or the green energy side. I am also the deputy chairman of the Energy Retailers’ Association of Australia and we are appealing to governments at all levels to deliver regulatory
stability. There has been a very significant period of regulatory change and uncertainty, which is not good for business nor for customers. Allowing the market to settle down and operate without intervention would be great.
“While I was there, Ergon bought Powerdirect Ltd, a small energy retailer, for $103 million. A year later, in 2007, we sold the whole lot to AGL for $1.2 billion
What will be the impact of the removal of the carbon tax?
All moves to decarbonise electricity push up electricity prices, whether it is done through the imposition of a carbon tax or schemes operating at the state and federal levels to support renewable energy. In Australia we have been used to coal prices which are extremely cheap by world standards.
Obviously QEnergy and other companies will be passing on the repeal of the carbon tax. In NSWand Queensland, prices are set by regulators
so the impact must flowthrough those price
settings. This is not something you can just turn on and off — we want to make sure the process is orderly. We can take some comfort from the fact that governments of all persuasions and at all levels are trying to take measures to hold down electricity prices. I personally think, though, that we have seen the bottom in real electricity prices.
How do you see the state of the solar power industry in Australia at the moment?
I think we are past the tipping point for solar — I do think that people generally like the idea of doing something for the planet and generating clean energy themselves. Solar energy is more expensive than ordinary “black” electricity generated from coal, but its cost has come down dramatically. I think the solar industry is established in Australia and we will continue to see a growth in sales despite its higher cost.
What do you see as the long-term role of renewable energy generally in Australia?
A problem with renewable energy sources is that they don’t provide a secure supply 24/7. The great thing about our existing generation
fleet is that it provides baseload energy to keep the schools and the hospitals running. The sun doesn’t always shine; the wind doesn’t always blow. So until we get the battery technology far more advanced and more commercial, there will continue to be a good proportion of our energy
supplied by our traditional fleet — coal.
Is there anyone who has particularly inspired you during your career?
Jillian Broadbent. When I was at NSW Treasury Corporation, she was at BT. I used to tell my grandfather I wanted to be Jillian Broadbent. She was very pioneering and recently stepped down as a director of the Reserve Bank. She is a remarkable woman.
What are your plans for QEnergy?
Our focus is definitely on smaller businesses and we want to be the only electricity provider that small businesses consider in the eastern states. We are also operating in the Northern Territory, where we are working with a consortium called Northern Power to bring generation competition to the market.
What about your own plans?
I find the business fascinating. QEnergy is a customer business and I love ensuring that it is actually built around the customer. I love the business and will stay with it for as long as I can.