Kate Far­rar, man­ag­ing di­rec­tor, QEn­ergy

Kate Far­rar QEn­ergy MD

The Australian - The Deal - - News - IN­TER­VIEW GLENDA KOR­PO­RAAL PHO­TOG­RA­PHY ED­DIE SARAFIK

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

Man­age­ment.

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.

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