In today's ever-evolving energy landscape, strata communities are presented with innovative ways to source power, such as embedded energy networks. These networks offer unique benefits, but strata communities must carefully consider the differences between retail and agency embedded energy models to make informed decisions. This case study aims to shed light on these differences and offer tips for strata communities navigating the world of embedded energy networks.
Retail embedded energy networks (EEN)
Unveiling the retail credentials: Retail embedded energy networks, backed by a retail authorization from the Australian Energy Regulator (AER), are like the experienced wizards of energy supply. These authorized retailers demonstrate their prowess across diverse areas including customer service, crisis management, workforce competence, policies, and business planning.
Benefits of retail authorization: Under the watchful eye of the AER, an authorized retailer can seamlessly operate embedded energy networks and offer electricity retail services. The recent legislative changes further cement retail networks' position, offering electricity customers in embedded networks full retail protections.
Risks & liabilities: The table below highlights the risks and liabilities that fall on the Body Corporate or site owner within a billing agent scheme compared to the safety provided by an authorized retailer.
Agency embedded energy networks (EEN)
Using an agency model for embedded energy networks can offer benefits, but there are potential challenges and drawbacks that strata communities should be aware of:
Regulatory changes: As highlighted in the case study, recent legislative changes suggest a shift towards providing full retail protections to customers in embedded networks. This could impact the viability and sustainability of agency models in the long term.
Limited control: With an agency model, the strata community might have limited control over key decisions related to energy supply, pricing, and customer service. The network operator holds significant influence in these areas.
Dependency on network operator: The success of an agency model heavily relies on the competency and reliability of the chosen network operator. If the operator experiences issues or fails to meet expectations, it could negatively impact the community's energy supply and services and ultimately the Body Corporate will be liable.
Lack of direct retailer relations: Residents in an agency model might not have a direct relationship with a recognized energy retailer. This can limit their ability to choose and negotiate energy plans that best suit their needs.
Limited competitive pricing: Agency models might not always provide the competitive pricing options that authorized retailers in the retail model can offer. This could result in residents paying higher energy prices.
Complex billing structures: Billing under an agency model can be more complex due to the involvement of multiple parties, potentially leading to confusion and disputes among residents.
Transparency concerns: Strata communities might face challenges in obtaining transparent and detailed information about energy usage, billing, and pricing under an agency model.
Uncertain future: The evolving energy landscape and changing regulations could introduce uncertainties regarding the long-term sustainability and effectiveness of agency models.
Customer service quality: Strata communities might have less control over the quality of customer service provided by the network operator in an agency model. Residents could face challenges if the operator's customer service is inadequate.
Transition challenges: If a community decides to transition from an agency model to a different energy sourcing arrangement, it could involve complexities and disruptions.
Limited consumer protections: While agency models might have offered certain advantages in the past, recent changes in regulations could result in reduced consumer protections compared to authorized retailers.
Tips for strata communities:
Understand regulatory changes: Stay updated on evolving regulations to gauge the long-term viability of agency models.
Review network operator: If opting for agency models, ensure the chosen network operator possesses the right skills to navigate compliance and customer service challenges as you will be ultimately liable.
Prioritize resident protection: Given the retail model's strengthened protections, consider the importance of safeguarding residents' interests especially around topics such as life support and debt recovery.
Evaluate risk appetite: Assess the community's tolerance for risks and liabilities associated with agency models.
Seek expert counsel: Engage legal and energy experts to decipher the fine print and make informed decisions.
To mitigate these potential challenges, strata communities considering an agency model should thoroughly research and carefully select a reputable and experienced network operator. They should also assess the potential impacts of regulatory changes on their chosen model and evaluate the long-term viability of their energy sourcing strategy.
Seeking legal and energy expert advice can be crucial in making informed decisions that align with the community's needs and goals.
We sincerely thank our Platinum Partners Altogether Group for this editorial.