On-selling electricity – information for on-sellers

An embedded electricity network is a small privately-owned and operated electricity distribution system that sits behind the main electricity network. For example, in Western Australia, the main electricity network (the South West Interconnected System) is owned and operated by Western Power and embedded networks are connected to this main network.

Embedded electricity networks are common in multi‑tenanted commercial buildings, such as shopping centres, and are becoming increasingly popular in new residential developments.

Embedded networks are also common in retirement villages and caravan parks, where the property owner operates the electrical infrastructure on the premises.

Visit Understanding Embedded Networks in Western Australia for more information. 

A distribution system means electricity infrastructure used, or to be used, for, or in connection with, or to control, the transportation of electricity at nominal voltages of less than 66 kV. 

The on-supply of electricity occurs where a person, known as the on-seller, purchases electricity from a licensed retailer (such as Synergy) at a master meter and on-sells the electricity to customers (usually tenants) in the embedded network controlled by the on-seller. Supply is usually through sub-meters. 

An on-seller is usually the property owner but can be someone that operates the embedded network on their behalf. 

Under the Electricity Industry Act 2004 (Act), anyone who generates, distributes, transmits and/or sells electricity to a customer for consumption in Western Australia must hold a licence or an exemption.

On-sellers that on-supply electricity in embedded networks are exempt from the requirement to hold a retail, distribution and or transmission licence provided that they adhere to the conditions of their Exemption Order.

For instance, under the Residential Tenancies Act 1987, landlords cannot charge tenants a daily supply charge. The Residential Parks (Long-stay Tenants) Act 2006 limits the amount a park operator can charge tenants for the supply of electricity.

Licence exemptions that allow the on-supply of electricity via embedded networks on commercial and residential premises are in the Electricity Industry Exemption Order 2005.

There is a separate licence exemption for caravan park operators in the Electricity Industry (Caravan Park Operators) Exemption Order 2005.

While the above Exemption Orders provide electricity on-sellers an exemption from the legal requirement to hold a retail licence, they must comply with the conditions of the exemption.

On-sellers must consider how other legislation may apply to their activity alongside the electricity exemption.

For instance, under the Residential Tenancies Act 1987, landlords cannot charge tenants a daily supply charge. The Residential Parks (Long-stay Tenants) Act 2006 limits the amount a park operator can charge tenants for the supply of electricity.

• On-sellers who do not comply with the conditions of their Exemption Order will no longer be exempt from the requirement to hold a licence.
• Without a licence or an exemption, an on-seller cannot legally on-sell electricity.

On-sellers must comply with minimum customer protection requirements outlined in their Exemption Order to on-sell electricity in an embedded network.

Under the Exemption Orders, on-sellers have obligations related to:

• billing
• charging; and
• residents who require life support equipment. 

A comprehensive list of an on-seller’s obligations in relation to residents in embedded networks, including residents who require certain life support equipment, is provided below.

Further information on protections for customers requiring life support and their responsibilities can be found here.

A person requiring life support equipment does not need to be the owner or renter of the apartment, caravan site or similar for the protections to apply.

The Exemption Orders require on-sellers to provide their residential and commercial tenants a bill.

The bill must include as a minimum:

• the quantity of electricity supplied to the occupier of the property; and
• the fees and charges payable for:
  • electricity supplied; and
  • the provision of electricity services in relation to the property.

The customer must be able to easily access this information. 

In many cases, each unit or premises will have its own sub-meter that can be read for the purposes of issuing a bill for electricity usage.

If there are no sub-meters, then the amount paid might be calculated on the basis of how much space each unit/premise takes up (e.g. a business occupying 25% of the floor space of a complex that is serviced by an embedded electricity network might be responsible for 25% of the consumption charges for an embedded network). 

On Seller's obligations Summary

Electricity services include:

• the maintenance of the electricity system that transports electricity to a property;
• the connection of a property to an electricity system;
• meter readings; and
• the preparation and issuing of bills.

An electricity pricing arrangement is typically divided into two parts: a consumption charge and, where applicable, a daily fixed supply charge.

The per unit consumption charge is to pay for the electricity that the customer consumes, while the daily fixed supply charge is to pay for electricity services that are part of supplying electricity to the customer.

As the daily fixed supply charge is intended to cover the on-seller’s costs of providing these electricity services, an on‑seller is not allowed to impose additional charges for these items. That is, an on-seller cannot impose an additional charge for services such as reading the customer’s meter or preparing the customer’s bill.

Additional pricing requirements that apply to residential customers of on-sellers:

If the on-seller buys electricity from Synergy or Horizon Power, a residential customer may not be charged more for electricity consumption than a residential customer of Synergy or Horizon Power would be charged.

• Synergy and Horizon Power’s regulated electricity prices are the A1 tariff and A2 tariff respectively.
• If the on-seller buys electricity from a retailer other than Synergy or Horizon Power, the restriction on charging no more than the amount Synergy or Horizon Power is allowed to charge its residential customers (for electricity consumed) does not apply.
• If the on-seller generates its own electricity, a residential customer of the on-seller may not be charged more for the electricity than the cost the on-seller incurs in generating that electricity.
• For the daily fixed supply charge, when applicable, residential customers of on-sellers located within Synergy or Horizon Power’s licence areas cannot be charged more than a residential customer of Synergy or Horizon Power would be charged for this fee. This includes on‑sellers that:
  • buy their electricity from Synergy or Horizon Power; or
  • buy their electricity from a retailer other than Synergy or Horizon Power; or
  • generate their own electricity.
• However, under the Residential Parks (Long-stay Tenants) Act 2006, park operators cannot charge tenants more than the amount of the daily supply charge for “additional dwellings” under the A1 and A2 tariffs, respectively.

For commercial customers of an on-seller, the Electricity Industry Exemption Order 2005 does not include any requirements relating to the amount the on-seller can charge for electricity or electricity services.

On-sellers who operate embedded networks are not permitted to be members of the Western Australian Energy and Water Ombudsman Scheme, which is restricted to licensed retailers and distributors. This means a customer of an exempt on-seller does not have access to the Energy Ombudsman’s complaint and dispute resolution services if a problem arises. 

In the first instance, if an on‑seller and their customer have a dispute or complaint, they should try to resolve it between themselves. However, if the dispute or complaint cannot be resolved then someone else may be able to help you. Below are details of organisations that may be able to assist: 

Consumer Protection

• Consumer Protection provides advice and information to Western Australian consumers, businesses, landlords and tenants. It also provides a conciliation service to consumers with individual complaints about product or service suppliers.
• Information on consumer rights, the complaint handling process and the conciliation service is available at Consumer Protection. Consumer Protection is responsible for ensuring that traders in Western Australia comply with the Australian Consumer Law (ACL) and may take enforcement action against traders who breach the ACL.
• Consumer Protection does not normally take complaints or conciliate in matters relating to business-to-business transactions. The Small Business Development Corporation (SBDC) provides a dispute resolution service where a business is in dispute with another business.

Small Business Development Corporation

• In Western Australia, the SBDC offers free guidance and access to a low-cost mediation service to assist small businesses in resolving disputes with other businesses or government departments.
• If you are a small business that requires advice or assistance to resolve a dispute with customer in an embedded network, the SBDC may be able to help you.
• Further information about the SBDC’s ‘Alternative Dispute Resolution’ service can be found on the SBDC website.

Energy Policy WA

• Energy Policy WA administers licence exemptions and is responsible for this webpage. It is not a complaint handling body like the Consumer Protection, which has statutory powers to investigate complaints.
• Energy Policy WA can provide information on licence exemptions and the regulatory framework that exempt persons operate within but cannot formally investigate complaints about a person operating under a licence exemption, such as an exempt on-seller.
• Energy Policy WA can be contacted by phone on 6551 4600 or by email at EPWA-licence-exemptions@deed.wa.gov.au.