Aurora retail arm survival promised

AURORA Energy is confident its retail arm will survive when faced with competition for its "mum and dad customers" as it scrambles to establish a "slim and lean" business model before July.

Opposition energy spokesman Matthew Groom grilled Aurora bosses during yesterday's parliamentary committee hearings focusing on the business's vulnerability to competition.

The government had intended to sell Aurora's retail customer base, but the sale process collapsed in September, forcing Aurora to continue to stay in business indefinitely.

Mr Groom repeatedly asked how many customers Aurora could lose before becoming unviable.

However, Aurora chief executive Peter Davis said it was not that simple.

"There's not really a threshold because you just keep adjusting your cost structure and operations," Dr Davis said.

"If we lose a whole lot of customers, you'd have to cut your cloth accordingly. Our approach here is to make sure we don't lose a whole lot of customers."

Dr Davis said he was confident many small residential customers would stick with Aurora after the introduction of full retail competition based on its track record of retaining customers who had already been given the choice to go elsewhere for their power.

Aurora held on to 798 out of the 903 contracts that came up for renewal, including small businesses that had a choice of provider for the first time.

Dr Davis said details of the structure of the business, to be known as Aurora Retail, were still being worked out.

What remains of the business once the distribution arm is merged with Transend is expected to employ about 200 people.

The Australian Economic Regulator is still considering how much of the cost of preparing for the sale process - estimated at $32 million - will be passed on to Aurora customers.

Aurora maintained that much of the money had not been wasted as it was necessary to ready itself for full retail contestability.

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