Is Your Embedded Network Better Off Being Supplied Electricity From An Authorised Retailer Or a Billing Agent?
August 13, 2020
Communities with embedded networks in Queensland have two choices when it comes to engaging a utility provider to manage their energy supply. They can either be an “exempt seller” themselves and engage a billing agent to manage the sale of energy and other services, or they can appoint an authorised retailer instead.
Until recently, there weren’t many authorised retailers operating within embedded networks, but that has changed with the announcement of the new regulatory framework set to be implemented over the next few years.
Until the changes come through, communities need to decide whether to go with an authorised retailer or continue to operate under the traditional billing agent model. Below we set out the primary considerations when making this decision. Basically, it comes down to whether your community wants access to better consumer protections or caps on energy fees and charges.
Authorised energy retailers are highly regulated and most of this regulation is focused on protecting consumers. Therefore, the advantage of having a retailer supply your community is that you have access to the same consumer protections as customers that don’t live in an embedded network. Customers of authorised retailers can be guaranteed National Electricity Market compliant metering, access to extensive support if they are suffering financial hardship and a range of other benefits, including receiving notices about rate changes in advance.
While customers in communities that have engaged billing agents have the right to request a payment plan and will get notified of a rate change at the time of their next bill, those requirements are not as rigorous as the ones needed to be met by authorised retailers.
On the flip side, authorised retailers in embedded networks can effectively charge customers whatever fees, charges and energy rates they want, however, the Body Corporate does not have any liabilities for debts or regulatory compliance as they are not the service provider. While on-market or on-grid customers have their prices capped at the government’s default market offer (DMO) prices, the DMO does not apply in embedded networks meaning there are no restrictions on energy rates. Likewise, there are no restrictions on what authorised retailers can charge customers for services like disconnection and reconnection. Some embedded networks take advantage of this and even if their rates are low, customers can be hit with a price change, or be met with other high fees they don’t expect.
In comparison, communities with billing agents are limited by the price caps in the exempt selling guideline, which means customers can be guaranteed that their prices won’t exceed the standing offer of their local retailer. Additionally, Bodies Corporate can only recover the cost of supplying the service which means that savings gained from the Body Corporate negotiating a bulk retail supply rate is required to be passed on to the consumers. Consumers also benefit from restrictions on charges for things like paper bills and late payment fees. The downside is that any debts from non-paying residents are pursued and carried by the Body Corporate rather than the retailer as the Body Corporate is the service provider who is also required to pay for the bulk retail supply upfront. Regulatory compliance is another obligations but usually taken on by the billing agent as part of service terms.
Once the regulatory changes come into effect, most communities will need to be supplied by an authorised retailer anyway, and at that time, the price caps will probably be extended to apply to authorised retailers too. ARC has recently submitted an application for a retail authorisation with the Australian Energy Regulator so that clients can transition to the new regulations as soon as required.
Until then, the decision of whether to go with a billing agent or an authorised retailer depends on whether fees and charges or rights and protections of occupants are more important to your community.
This article was contributed by Adam Ford, General Manager and Partner – ARC Utilities Management