Friday, May 20, 2022

Strata Embedded Electricity Network – The what, the how and the future

In strata life, there may come a time when you finally have to get your head around a strata embedded electricity network.


Don’t worry – you’re not alone.

But in the ever-changing and always-exciting world of strata living, especially in brand new developments, it’s big news indeed.  In fact, there are over 200,000 Australians who already get their power from a strata embedded electricity network (EEN)

First, we’d better describe exactly what it is.

Basically, to get the benefits of this sort of private electricity network, you need a privately owned, multi occupant site.  Now, normally you’d have a meter that is owned and supplied by the local power supplier.  But with an EEN, the meters are privately supplied, and all of them are connected to a main ‘gate’ that aggregates the power supply.

Still not sure what that all means?

Basically, it should mean cheaper power – because the owners corporation buys it direct from the wholesaler and then figures out how to bill the individual units.

If it sounds a little risky, the headline news is that the EEN market is regulated, owners can opt out, and prices can never exceed what is available to everyone else.

Benefits of a Strata Embedded Electricity Network

Sounds like a good deal!  Sign me up!  Let’s explore the benefits:

  1. Savings

The savings under an strata embedded electricity network model can amount to about 15% compared to a normal retail power supplier.

  1. Flexibility

When you go with a normal retailer, there are usually lock-in contracts.  But as the building owners actually own the EEN, the designated EEN manager has the freedom to set much more flexible conditions.

  1. Income stream

Because of the owners of the building actually own the EEN, it’s an income stream that can cut building running costs including repairs and maintenance.  And a side-effect of that can be lower owners corporation fees.

  1. Handy

Let’s face it, when you run a household, you’ve got enough to think about.  With an EEN, the thinking has been done for you.

All good!  Right?

While the benefits can be pretty cool, it’s important to understand the pitfalls as well.   Everyone’s granddad taught them that there’s no such thing as a free lunch, so are there always lower power prices?  And do they come at another cost?

Pitfalls of a Strata Embedded Electricity Network

Here are the potential pitfalls of a EEN:

  1. One supplier

Although at least market power rates are guaranteed by the regulator, an EEN does mean less choice for the occupant who wants to ‘go it alone’ and make their own call.  Indeed, if an EEN agreement is terminated, meters can be removed altogether – and the bill to put a new one in can be hefty.

  1. No competition

As many people do decide to switch energy provider, you can’t always do that easily if you live under an EEN.  And especially in NSW and Victoria where there is a huge amount of competition, plenty of people have plenty of reasons to want to shop around.

So with an EEN, you can lose the benefits of high competition altogether, as the wholesale supplier knows that the customers aren’t going to be shopping around for a better deal.

And even worse, rates can simply jump significantly with no reasons given.  At one apartment block in Melbourne, residents found that simply by dumping the EEN contract and changing the meters, the $50,000 cost would be completely paid off within just two years.

  1. Stuck

Although we said the terms of the EEN contract could be better than a retailer, that’s not necessarily the case.  EEN contracts, in fact, can be even harder to get out of, and then can often run for up to 20 years!

  1. Disputes

If you find yourself in a dispute, it will be with an owners corporation you have to deal with on a daily basis rather than a big, faceless energy retailer.

  1. “Is it green?”

Especially in this environmentally-minded year of 2018, ‘green’ considerations are a big deal.  And an EEN can definitely be green!  One building in Sydney is completely carbon neutral thanks to an EEN, batteries, and solar panels – and bills are down over 50%.

But on the other hand, the EEN might not be particularly green at all.  That’s because some progressive retail energy providers not only buy ‘green’ energy to sell to the customer, they can agree with the customer to have some ‘green’ energy fed back into the grid – which means a smaller carbon footprint.

But there’s no guarantee the EEN will be as committed to being green as either you or your preferred retailer are.

  1. Not well regulated

While we said earlier that EENs are regulated, there is plenty of anecdotal evidence that suggests prices can actually be higher than retail.  It’s why the Australian Energy Market Commission is currently writing up recommendations to put to the COAG Energy Council.

In a nutshell, the EEN is considered by the Australian Energy Regulator to be an “exempt seller”, which means some protections and rights guaranteed to those buying retail are actually lost.

Read related: Unauthorised strata works – who is responsible for repairing them?

What can you do about a bad Strata Embedded Electricity Network?

As you can see, there are two sides to the EEN argument.  There are those who love the convenience and trust that the wholesale purchasing power will pay off on that bill.  But then there are those who love how high competition works and trust in their ability to find a great deal – if only they have the freedom to choose.

If you find yourself with no choice and what you consider to be a bad EEN deal, there are ways to deal with it.  In NSW, you can contact the Energy & Water Ombudsman and they will investigate disputes, fees, supply quality and more.  In South Australia, the Ombudsman can only be contacted if the EEN is a member.

But everywhere else in Australia, the Ombudsman may simply say “I can’t help you”.  One Melbourne apartment dweller told the ABC that he’s had to blow a lot of time and spend a lot of money on lawyers just to get out of a bad EEN contract.

The final word: Watch this space!

As we speak, the Australian Energy Regulator and the Australian network of energy Ombudsmen are working together to see if the regulation of EENs can be improved.  How will those talks fare?  We’ll definitely let you know!

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