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Embedded network services

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The contents on this website are provided for information purposes only. Any information posted from a law firm is general commentary and is not legal advice. Specific advice related to individual matters should be sought independently.

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Date 23 Jul 2022
Date by

The Altogether Group
Date

Embedded network services

State of the market

The energy market is going through some unprecedented change.
Recent media coverage and the AER release the Default Market Offer Determination for FY23 confirms our view that wholesale costs are also elevated due to a myriad of circumstances.
  • Extreme wet weather has impacted coal and gas generation output
  • Unplanned generation outages are hurting supply
  • The war in Ukraine (in addition to the unspeakable humanitarian impact), is driving up the underlying cost of fossil fuels.
state of market
Altogether are working on a number of initiatives to adjust to the current environment. Some of these factors are temporary in nature, but others are more unpredictable, especially war in Europe however we are well positioned to support our communities.

Updated exemption conditions

ongoing advancements to the embedded network legislative framework have been introduced to provide consistent treatment for small market customers, by providing greater access to retail competition and increased consumer protections.

• Effective 1st june

Body corporate opportunity

exemption scheme
retailer network
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corporate
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corporate
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embedded network owner
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incoming gate meter costs
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regulated liabilities and penalties
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ombudsman expenses
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billing and service expenses
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life support liabilities
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hardship liabilities
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payment processing
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debt liabilities
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Body Corporate act
  • Must not operate as a business
  • Must only recover operational cost 
Energy law
  • Must be eligible to be exempt
  • Criminal prosecution for false declarations
  • penalties for non-compliance
Privacy act
  • energy data is sensitive
  • customer data must be protected
  • consent must be granted

What are the implications of a body corporate operating an EN and attracting surplus?

A Body Corporate cannot carry on a business,

96 Body corporate must not carry on business

  • A body corporate must not carry on a business.

Examples— A body corporate must not carry on business as— • a letting agent • a tour operator • a restaurant business • a real estate developer • a land trader

  • However, the body corporate may—

(a) engage in business activities to the extent necessary for properly carrying out its
functions; and
(b) invest amounts not immediately required for its purposes in the way a trustee may
invest trust funds.
Examples for subsection (2)(a)— 1 leasing part of the common property 2 selling body
corporate assets no longer required for the scheme.

(Body Corporate and Community Management Act Qld 1997)

Section 210 – Supply of Services by a Body Corporate

  • The body corporate may, by agreement with a person for whom services are supplied, charge for the services, including for the installation of, and the maintenance and other operating costs associated with, utility infrastructure for the services, but only to the extent necessary for reimbursing the body corporate for supplying the services. Note— See also section 96 of the Act.
  • In acting under subsections (1) and (2), the body corporate must, to the greatest practicable extent, ensure the total cost to the body corporate, other than body corporate administrative costs for supplying a service, including the cost of a commercial service, and the cost of purchasing, operating, maintaining and replacing any equipment, is recovered from the users of the service.

(Body Corporate and Community Management (Standard Module) Qld 2008)

What does this mean?

  • Bodies corporate must remember the key intent or purpose for providing bulk supply services to owners/occupiers, namely that buying in bulk will ultimately derive a monetary benefit for the owners/occupier within the Scheme.
  • While it is the body corporate’s obligation to administer common property and body corporate assets for the benefit of the owners of lots in the Scheme, this must be balanced against a body corporate duty not to carry on a business.
  • Reasonable for the body corporate to be reimbursed the costs associated with supply the service e.g. operating costs, installation costs and the like. However, what is not reasonable is to charge owners/occupiers more simply because the body corporate would like to raise funds to pay for future improvements to the Scheme’s infrastructure.
  • There must be a fine line between the costs associated with supply the service and the costs associated with enhancing the service.
  • It would be reasonable for the body corporate to recover maintenance costs associated with the supply of the service because without those costs it is unlikely the service can be rendered.
  • It may be unreasonable to recover improvement costs because those improvement costs do specifically relate to supply the service rather enhancing the service.
    A. Such improvement costs should go to general meeting and be raised through the sinking fund rather than a service arrangement.

Implications?

  • breach of the body corporate’s duties under the Act and Module.
  • benefits derived should be received directly by the user of the service.
  • potential to be ordered to repay the surplus.
  • problematic with budgets and future levies.

The body corporate should be

  • getting advice on what costs directly relate to the ‘supply of the service’.
  • assess the matters on a case-by-case basis.
  • undertake regular audits to ensure that the funds being collected are not creating a surplus.
The below downloadable PDF is available to provide information surrounding Embedded Network Services, prepared by the Altogether Group
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