The utilities regulator in New South Wales will begin a review into the pricing of private energy networks and also whether new hot and chilled water services should be banned.
The review by the Independent Pricing and Regulatory Tribunal (Ipart) follows a NSW upper house inquiry last year that heard evidence about “significant consumer issues” involving embedded networks supplying electricity, hot water and gas.
More than half a million people residing in apartment blocks, retirement villages, caravan parks and elsewhere pay for services on-sold by suppliers. Many sellers to embedded networks do not require authorisation from the Australian energy regulator and typically fall outside the remit of energy consumer law.
Soaring utility bills, particularly for energy, have added to the urgency to bolster consumer protections. Victoria, for instance, a year ago banned embedded power networks in new unit blocks, enacting a 2018 promise.
Ipart noted the inquiry had heard one witness received a hot water bill for $2,000 for a nine-month period while a neighbour was charged $9,700 over a 14-month stint.
“Customers in embedded networks need protections from unreasonably high prices,” tribunal member Sandra Gamble said in a statement.
“Most consumers within embedded networks are locked into a contract with the supplier at their site,” she said. “There are few limits on the prices that they can be charged and they are unable to shop around for a better deal.”
Power bills for NSW residential customers rose by between 20% and 25% from 1 July based on default market offers, an increase in line with other states. However, more embedded network customers should be able to have access to such offers, the upper house inquiry found.
The previous Coalition state government accepted most of the inquiry’s recommendations, including initiating an Ipart review into whether a maximum price below the default market offer price was required for embedded electricity networks. It also launched an embedded network action plan just before the March state election.
The Minns Labor government plans to consider its options after the Ipart review.
Ipart will release consultation papers for customers and industry on Tuesday, seeking their views on how price caps should be set and whether there are clear benefits of hot and chilled water embedded networks to justify their construction in the future.
Submissions are due by 11 September, with stakeholders invited to an online workshop planned for 21 September. Ipart will release a draft report by November.
