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The importance of knowing your obligations with Embedded Energy Networks
Embedded Energy Networks are typically used in sites, such as apartment blocks, retirement villages or shopping centres, to enable owners to separately sell and bill energy to all of the tenants or residents based there. A key benefit is the ability to aggregate their building’s electricity usage to source cheaper, bulk pricing for their residents and common areas.
The owner of the embedded network is usually the body corporate and is commonly referred to as an ‘exempt seller’ in an energy context because they do not need to become authorised by the Australian Energy Regulator as energy retailers, as the activity of on-selling energy is incidental, i.e. not their main activity. The AER oversees and enforces the ‘Exemption Scheme', and those who operate under it are subject to a range of obligations, although exempt from broader obligations that are normally required of an authorised energy retailer who sells energy as their main business.
In most cases, energy arrangements are managed by bodies corporate (or by the strata manager they engage), who choose to either run their embedded network under an arrangement with an authorised energy retailer or, more commonly, via a billing agent operating under the ‘Exemption Scheme'. However, there are key differences between having a billing agent manage your embedded network under an exemption scheme versus an authorised energy retailer.
Drew McKillican, Executive Manager of Energy Services at Altogether Group, a leading multi-utility service provider, says that it is important for strata managers and bodies corporate to be aware of the legal and financial ramifications of using the two types of arrangements.
“Many strata managers or body corporates are not aware that retail offerings and billing agency arrangements under the Exemption Scheme are vastly different in terms of liabilities and responsibilities under the National Electricity Retail Rules (NERR) and the Australian Energy Regulator (AER) rules and guidelines,” says Mr McKillican. “All energy consumers must always retain their customer rights and protections, however the reality under the two arrangements can differ significantly in terms of having proper access to those rights. Many owners of embedded networks wrongly assume that they are not responsible for the delivery of key consumer protections under an exempt seller arrangement, which means their operation of the embedded network may not be compliant, leaving them vulnerable to financial and legal risk.”
Under exempt seller schemes, bodies corporate are still responsible for many financial and legal aspects including gate meter retailer costs, regulated fines, ombudsman costs and the debt risk of unpaid bills, which could potentially be quite substantial. Furthermore, they still have important liabilities in relation to capturing and declaring data for life support customers and assisting those who experience difficulties paying their energy bill. Many bodies corporate are simply not aware of their responsibilities and that can land them in trouble with the Regulator, or with customers who complain that their rights and protections are not being fulfilled.
In comparison, all of these concerns are taken care of when under a retail offering. You have access to all the protections that retailers are obliged to provide you under the National Energy Retail Law and National Energy Retail Rules, and much of the liability and compliance obligations therein shift directly to the retailer, and away from the body corporate.
“Energy is such a complex and evolving landscape. Changing legislative requirements make compliant operations of embedded electrical services in strata communities very difficult to deliver and maintain. Under a retail model we find that our customers appreciate knowing that all of these responsibilities are handled by us, giving them time to focus on their areas of proficiency, rather than trying to be experts in energy law and regulation,” continued Mr McKillican. “While most Embedded Energy Networks still currently use exempt seller schemes, this is likely to be influenced by legacy arrangements or a lack of awareness about the obligations involved. Yet, continuing an arrangement with an exempt seller while not being across all of the regulation and responsibilities that carries is likely to not be in the interest of strata communities.”
“My advice is for bodies corporate to talk to an energy expert at Altogether Group to ensure you are fully across your obligations, in order that you can make an informed choice regarding the arrangement that works best for your community. My prediction is that it is not likely to be long before compliance around embedded energy networks becomes increasingly enforced, in fact we are already seeing the Regulator tighter their scrutiny in this area,” finished Mr McKillican.
To support the knowledge of customers, clients and communities, Altogether will be launching the ‘Altogether Academy’ in late 2021. The academy will focus important education topics such as the lifecycle of embedded networks, sustainable technology, utility data, government reform and utility regulation. To register interest and be kept informed click here
3 tips for reviewing your embedded energy network arrangement
Or simply contact Altogether for an obligation free briefing on Exemption Rules and we can help you navigate the requirements.
Altogether Group works with strata managers, bodies corporate and developers to design and manage embedded energy networks on behalf of communities. Customers can choose the type of arrangement they prefer as Altogether is an authorised energy retailer (licensed by The Australian Energy Regulator), an embedded network operator/manager, and an energy solutions partner.
Through local utility services, Altogether Group is currently providing electricity, gas, hot water and potable water embedded network services to over 25,000 customers through their local teams in Brisbane, Gold Coast and Sydney, with a vision is to increase this to 100,000 within the next three years.
