Reuben Acciano wasn’t told he’d have to sign up to his new apartment’s embedded power and gas network until the day he signed the lease.
“I was really angry … it wasn’t in the ‘for lease’ ads, [it wasn’t] mentioned by the manager during the walk through,” the Melbourne renter says.
“I signed it because of the urgency to vacate my old property, but I would absolutely refuse to go into a new rental situation where I can’t choose my utility providers in the future.”
Embedded power networks are common in multi-resident complexes like apartment blocks, caravan parks and some retirement homes.
Rather than encouraging occupants to shop around for their own power provider, electrical wiring is configured to allow owners to sell energy back to tenants, by bulk-buying supply from a retailer or generating energy onsite.
Most sellers to embedded networks are “exempt” because they don’t require authorisation from the Australian Energy Regulator (AER) and often fall outside the remit of energy consumer law.
The CEO of the Consumer Action Law Centre, Gerard Brody, says people who live in buildings with embedded networks are likely to be more affected by the energy crisis because they lack the agency to change retailers in the instance of price hikes.
“These people have limited – if any – choice,” Brody said.
“They can’t shop around to get better prices and they often can’t choose things like solar and batteries as a way to regain power from providers and save money.”
About half a million people are believed to purchase energy through embedded networks, the AEMC says. However, the real figure could be higher.
“There’s no database on how many embedded networks there are nationally, nor the number of customers within each embedded network,” a spokesperson said.
While consumers in this situation can buy electricity from an energy retailer, it’s often difficult to outsource power because of the embedded network’s wiring and associated charges.
Kara Jade and her roommate say they were “forced” into an embedded network after moving into an apartment together on the NSW central coast.
“We didn’t know anything about it … we just got a $1,000 water bill,” Jade said.
“We’re forced to pay our electricity monthly … and the prices are so much more than when I was with my previous provider.”
In 2017, the Australian Energy Market Commission (AEMC) released a review into the regulatory arrangements for embedded networks, which found many under the schemes weren’t receiving better prices than customers with standard supply arrangements.
It also found the AER didn’t have enough power to enforce consumer protections for embedded network customers.
Some reforms were introduced in 2018, but a spokesperson from the AEMC said its final recommendations, provided to the energy council of the Council of Australian Governments in 2019, have not been progressed.
The Public Interest Advocacy Centre said the majority of issues it raised in its 2017 submission to the AEMC were still current five years later.
Program director Douglas McCloskey said the structural disadvantages people living in embedded networks faced would hit “particularly hard” if energy prices continued to rise.
“People living in embedded networks should have a right to access the energy they need as affordably and fairly as everyone else,” he said.
“Reform is needed to focus on the needs of the consumer, not the business model of their energy provider.”
In 2018, the Victorian government made an election commitment to ban embedded networks in new residential apartment buildings with exemptions for buildings using renewable energy micro-grids.
The same year, tenants were afforded the consumer protection to raise complaints with state and territory Energy and Water Ombudsman if treated poorly or unfairly, as long as the provider was an ombudsman member.
NSW ombudsman Janine Young says regulatory frameworks for embedded networks are no longer fit for purpose because of the proliferation of apartment buildings in the past decade.
Young said customers within embedded networks weren’t protected by a default market offer, or a cap, on electricity and gas, and were also excluded from consumer protections like rebates and concessions.
“Developers build apartments with embedded networks because it’s a cheaper way of putting in an electricity and gas structure,” she says.
“But they should still have essential services and relevant energy consumer protection. I see customers stop using heating because they’re too scared about the bill – elderly people with compromised health risks.”
Acciano is yet to receive his first bill from Origin, the supplier servicing his apartment block.
From 1 July, residential Origin customers, excluding Victorians, will have an average price increase of between $180 and $388 annually, with the sharpest rise in the ACT where costs will jump by 18%.
An Origin spokesperson says average price change movements for customers in embedded networks are “broadly in line” with price rises to take effect for customers on variable tariffs.
Data provided to Guardian Australia showed the average prices for embedded network customers in New South Wales, South Australia and Queensland will jump by 15% under the changes compared to 14.4%, 10.4% and 13.7% respectively for other customers.
Acciano says he earns enough to absorb the increase but should have the same options to choose his electricity provider as other consumers.
“All of this is at the expense of consumer choice,” he said. “In an era where ethical energy with a greater mix of renewables is highly desirable to regular citizens who want to do their part to mitigate the climate emergency, it’s a bit shit.”
