Embedded network services
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The Altogether Group
Embedded network services
State of the market
- 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.
Updated exemption conditions
• Effective 1st june
Body corporate opportunity
- Must not operate as a business
- Must only recover operational cost
- Must be eligible to be exempt
- Criminal prosecution for false declarations
- penalties for non-compliance
- 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?
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
(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.
- 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.
20 November, 2023
31 January, 2022