ENERGY MANAGEMENT.
Common area Electricity
What can my body corporate save on common area electricity?
Common area greater than (100 MWh per annum in QLD approx. $1700 per month) (160 MWh per annum in NSW and VIC approx. $2600 per month) are eligible for market contracts savings 15-52% by re-negotiating and fixing the rates.
Common area less than 100 MWh per annum QLD Tariff 11 residential tariff – We are in the process of a special offer for Strata Industry as a collective group.
Common area less than 100 MWh per annum QLD 160MWh in NSW and VIC on Business Tariffs we can get 10-18% discounts now.
Group Offer and Discounts for Tenants and Lot Owners
Option 1: Individual Offer for Lot owners or Tenants within a Strata Arrangement
Watt Utilities are currently negotiating an offer for Individual Lot owners and tenants within strata that work together (Not in an On-Supply situation or embedded network) Offer TBA : Register your Bodies Corporate Interest now. Link no of lots etc.
Option 2: On-Supply or Embedded Network
This is only applicable for certain size buildings or where useage can be combined through one point. A bulk bill is supplied to the site and the electricity is billed at an agreed rate. All lot owners must agree in writing. Savings are excellent yet it has complexities and switchboard modifications and other implementations need to be considered. See Below Q&A.
Questions and Answers about On-Supply (Embedded Network) of Electricity
The general question and Answers below are for QLD – Only. Victoria – Has similar Rules yet Electricity Act is different. NSW – Has even tighter controls.
General Questions
Q. Can the Body Corp move forward without 100% of all lot owners agreeing in writing?
A. We strongly advise against it unless you have worked out the costings to meter someone out of the arrangement and it is still viable. If you cannot get it in writing from all lot owners DO NOT proceed. Under the electricity act QLD tenants/lot owners have a choice on which retailer they use. A body corporate cannot vote on majority or force a lot owner or tenant into an On-Supply arrangement. A written agreement between the lot owner/tenant is the only way to safeguard the body corporate and override the Electricity Act. If a Tennant objects to entering into the arrangement and the body corporate does not have it in writing, the body corporate will have to pay the cost of metering the person out which could be expensive.
Q. Will the Body Corp and Individual save money by changing?
A. This is determined on a case by case basis by completing a Strata contestability assessment it is a detailed analysis of your current business operations and electricity usage to determine the profitability of the exercise. Watt Utilities can do this analysis for you.
It is possible that your Body Corporate or lot owners may not benefit by moving onto a On-Supply arrangement that is why is important to find out the profitability and return on investment for the Body corporate and its tenants.
Q. Who can establish and On-Sell electricity in QLD?
A. This is determined by the Electricity Supply Act Chapter 1 Part 6. Attached on this Website.
Examples of persons under paragraph (a) —
• an owner, occupier or a person who has a right to use a caravan park, exhibition centre, hostel, hotel, industrial park, lodging house, marina, market arcade, motel or shopping centre
• a relevant body corporate
Q. What are the Advantages and Disadvantages to the tenants and body corporate wanting to On-Sell Electricity
A. Advantages
• Cost reduction - electricity prices can be negotiated and a market rate obtained at a lower rate than that of a current market tariff rate.
• A Tenant cannot be charged any more than the current market tariff that is set by the competition authority, so the tenant is protected by this legislation under the electricity act.
• A Body Corporate cannot make profit from the sale of electricity. Revenue generated from surplus can go back into reducing the common area electricity account which reduces levies, it can go straight into levy reduction or the savings can be passed directly to the tenants as discounts on their accounts.
• A Body Corporate can set the rate it wishes to charges tenants as long as it is not higher than the current market tariff (tenants are protected by law). This means if the Body Corporate enters into a 3-5 year agreement with a retailer they have some control over increases in pricing (excluding network and distribution price) you can minimise the impact of any future electricity price increases that you would be subject to if on tariff.
• You can outsource the billing provider to reduce risk however this is an added cost.
• Easier management of electricity situations.
• Greater flexibility in opportunities to further reduce costs by introducing energy saving measures.
• Greater control of the buildings electricity utilities.
A. Disadvantages
• A Body Corporate can be fined if it does not adhere to the Electricity Act and other relevant regulations and Acts .
• If a Body Corporate implements On-Billing the only legal way to collect a debt if a tenant moves out without paying is collection through the lot owner. The lot owner is the one who has the agreement with the body corporate not the tenant. This can be overcome by collecting a bond from tenants.
• Implementing On-Billing can be difficult as it requires all lot owners to agree and there is a complex process to follow for implementation.
• There are capital costs upfront and ongoing costs that need to be considered these are all outlined in the first assessment to see if it is viable.
• Once you have made the decision to go contestable for the common area or bulk supply you cannot go back to a tariff.
• The Body Corporate becomes liable for the site’s electricity account, it will receive monthly accounts yet tenants generally receive quarterly accounts, outgoings to income can vary, meaning bodies corporate need to hold funds to cover the difference.
Connection, Supply and negotiation of Electricity
Q. Who negotiates the electricity bulk supply contract with the retailers?
A. Watt Utilities does that to ensure best possible market rate.
Q. Will there be a cost to individual lot owners to change over to the bulk electricity from individual accounts.
A. No, this is a Body Corporate cost, yet a body corporate can redeem that cost via the electricity account via a fee until costs are paid back as long as the charging doesn’t exceed current Tariff Prices.
Q. Will I need a new meter if I switch to a different retailer for the bulk supply?
A. A remotely read interval meter for the bulk supply is required when moving to the contestable market. Watt Utilities will arrange a metering agreement for this. It is recommended that Watt Utilities engage an electrical engineer to complete a site inspection to ascertain the switchboard requirements and any potential additional change over costs.
A. For the on-billing arrangements for the individual units, the body corporate as the on-supplier can either buy new meters outright to replace the existing supply authority meters or purchase them from the existing metering provider.
Q. Who owns the electrical reticulation assets such as the building main switchboard and unit meters?
A. In most cases the Body Corporate retains ownership of the modified switchboard and the electrical installation in the building. Having purchased or replaced the individual supply authority meters for the individual units, these meters become sub-meters for the on-billing and the body corporate then owns them and is responsible for maintenance.
Q. Will the reliability of my electricity supply change as a result of this conversion?
A. No. The poles and wires supplying your building remain the property of the local electricity network provider and are maintained regularly. If there are any supply interruptions you simply call the same emergency number that you have used previously.
Q. Do I have to use the Body Corporate as my electricity supplier?
A. Yes. The purchase of electricity from the Body Corporate will be clearly detailed in the by-laws for your building that formed part of your original purchase or lease agreement.
Q. How do I get connected if I am a new unit occupier?
A. You contact the current on-billing provider whom the body corporate has appointed to obtain an initial read from the meter and set up your account. The current on billing provider details can be collected from your body corporate manager or onsite manager.
Q: Who is to be contacted if there is a fault with the bulk supply of electricity to the building and how quickly will the fault be remedied.
A: Same arrangements as current. (In Queensland Energex or Ergon are still responsible for supply of electricity to the building).
Q. What will be the costs to the Body Corporate to change over to bulk electricity?
A. There will be costs to determine viability of the project, Implementation costs, changes to the switchboard, purchasing the current metering infrastructure and ongoing billing costs. This will be determined in a profitability exercise done by Watt Utilities. Hence, determining the viability of moving forward is VERY important so you can determine return on investment and profitability.
Billing
Q. How is my electricity bill calculated?
A. This is determined by the Body Corporate yet the most common way is $/kWh rate that the Body Corporate pays for the building to your metered usage then add an administration charge as a separate line item to arrive at the legislated guaranteed level for supply of electricity to your building. There will continue to be separate meters for each unit, so the cost to each residential unit is based on the actual metered usage.
Q. What if my electricity bill looks too high or I have a billing enquiry?
A. The billing provider your Body Corporate has appointed will be responsible for resolving the issue.
Q. What options do I have for paying the electricity bill?
A. It is up to the Billing Provider and their methods of payment.
Q. Are there any additional charges that I may or are likely to incur?
A. Yes. A reminder notice fee may be charged for overdue accounts. If you as an individual unit owner anticipate a problem, please contact the on billing provider promptly to avoid any reminder fees and/or disconnection as a reconnection fee may be charged after disconnection for debt. A security deposit may also be required.
Q. Can I claim an electricity rebate?
A. Yes. You are entitled to an Electricity Rebate or concessions in Queensland if you hold one of the following current cards:
• PCC (Pensioner Concession Card)
• RHC (Repatriation Health Card)
• SC (Seniors Card Qld Government)
Q. How often will I receive my bill?
A. It is up to the Body Corporate it is generally a quarterly basis if you are a residential customer. Commercial customers receive their bill on a monthly basis.
Q. How long do I have to pay my bill?
A. That is a decision for your Body Corporate it is generally 14 days.
Q. What about my final bill/account?
A. If you wish to disconnect your service, the on-billing provider requires generally at least three business days notice and a forwarding address for your Final Account. If you do not give the required notice, you will remain responsible for the energy used (and for meeting any other customer obligations) until three business days after you give the required notice, or until a new customer has an account established in their name at the premises, whichever occurs first.
Q. How will an increase in tariff rates be determined?
A. Under this arrangement you will no longer be on tariff so your rates are set by the Body Corporate (they cannot be higher than the Tariff rate set by the government at the time so you are protected by law).
Some On Billers for Consideration
Some strata companies do their own On-Billing In House as an extra service so check your strata company’s capabilities first.
Other companies that provide billing services are:
SAS (New Development, Residential and Commercial) National , M2C (Residential and Commercial) QLD and Watts Energy (Commercial) QLD
Choosing a new energy retailer - Bodies Corporate.
In order to expedite the time and obtain savings for the Body Corporate and the Lot Owners, a body corporate may need to select a new energy retailer quickly. However in order to make informed decisions it is advised that the Body Corporate engage an energy consultant. The decision to elect a new energy retailer requires a process that must be adhered to legally.
All energy retailers provide quotes on the cost of energy supply with a short validity time period in most cases just three business days, therefore it is important to ensure that that body corporate acts in a legal manner before it can award a contract to the new energy retailer.
Under normal circumstances a general meeting is required by the committee to make the decision and this may take up to 28 days to call the meeting discuss the resolution and agree to the contract, of course this is the preferred method.
In some cases the chairmen of the Body Corporate or the Body Corporate manager may need to apply to the Adjudicator for approval to proceed with a contract provided by an energy retailer. However, during this time delay the body corporate may find substantial losses would be incurred as the Building’s energy supply is exposed to the spot market price for energy plus a 20% administration fee charged by the retailer once the building is out of contract. This case may also occur if the current retailer has been suspended from the national electricity market and the Body corporate as a customer of the suspended retailer is allocated to the “retailer of last resort” in order to maintain continuity of supply. This occurred in 2007 for a number of sites in QLD when Energy One was suspended as an Licensed energy retailer.
Option 1
Minute the decision to:
Elect a new energy retailer and approving an application to the adjudicator for approval. This can be achieved by a quorum of committee voting by Flying Minute (VOC), simply approving the body corporate manager to lodge an application on behalf of the body corporate, a copy of the Minute must accompany the application.
Complete Form 15 related to the strata Titles act:
Form 15 – is an application for adjudication under “emergency expenditure”. This form is for going straight to adjudication & bypasses the normal conciliation requirement and any subsequent delays to call a special committee meeting (28 days).
Provide documentation to support the application and may include the details of the Agreements, Quotes and other Supporting Documents as supplied from the energy retailer and broker on the potential losses that would occur in the case of a delayed decision by the Body Corp.
Drafted letter on BCM letterhead detailing a reason(s) for the urgency and of the consequences in not entering into an agreement. The energy broker can provide information to indicate the amount of potential loss that will be involved.
Option 2
There is another probably simpler process if the body corporate is comfortable with this process.
The Body Corporate committee via a flying minute (VOC) can approve the entering into an agreement with an energy provider on the understanding that the decision be ratified at the next general meeting. This way approval can be obtained within 24 hours and the agreements executed. This is especially useful when energy retailers provide quotes with a short validity time period.
In the same Minute the committee will authorise the calling of an Extraordinary General Meeting (notice period 21 days) to ratify the agreements. The only motions on the agenda for the EGM will be the statutory motion for Minutes of Last General Meeting and the motion to ratify the decision of the Committee to enter into agreements with the nominated suppliers. Agreements and supporting information upon which the Committee relied upon in reaching their decision must accompany the agenda.
In these circumstances the committee is acting responsibly and in good faith. They are looking after the interest of the owners and it is unlikely any owner would object to their decision. In the unlikely event the motion was rejected at the EGM the committee could make an application to the adjudicator for ratification as per the attached process.
The Body corporate committee under current circumstances has the power and indeed the responsibility to approve and execute such agreements.
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