Energy price caps plan for thousands of apartment dwellers

Apartment dwellers forced to pay high energy bills due to being part of a fixed “embedded network” scheme set to get relief under NSW Coalition plan.

The new rules apply to the controversial “embedded networks” schemes where utility companies build internal gas, electricity, hot water and stormwater systems in ­return for developers locking owners and tenants into long-term contracts. Picture: Richard Dobson

Energy price caps will be introduced for residents living in apartments, retirement villages and caravan parks as part of a raft of tough new rules the NSW Coalition will introduce to lower power bills.

The new rules apply to the controversial “embedded networks” schemes where utility companies build internal gas, electricity, hot water and stormwater systems in ­return for developers locking owners and tenants into long-term contracts.

The schemes are deemed controversial given the whole property is serviced by the same electricity provider, with individual residents having no control over who that is, and no option to change providers.

Multiple studies have found hundreds of thousands of people living in apartment buildings around Australia have become trapped by these schemes, and ending up paying higher bills than those free to choose their own energy provider.

The Coalition estimates its Embedded Network Action Plan will benefit about 150,000 residents, while also increasing consumer protections.

NSW Treasurer Matt Kean. Picture: Justin Lloyd

Under the plan, a maximum, IPART-determined price for gas and for hot and chilled water supplied through embedded networks will be set.

IPART will also be charged with undertaking a review into electricity prices in embedded networks, to recommend whether the maximum price should be set below the Commonwealth’s default market offer.

A separate review will also be initiated to examine whether the NSW Government should ban the establishment of new hot and chilled water embedded networks entirely.

The NSW Government will also write to the Australian Energy Regulator requesting that it only approve new electricity and gas embedded networks that are in the interests of consumers, and offering to initiate changes to the National Electricity and Gas Rules if necessary in order to achieve that outcome.

Energy Minister Matt Kean said embedded networks had failed to deliver for many energy consumers, including preventing customers from getting the best deals the market has to offer.

“Whether you’ve living in a freestanding home, or in an apartment block, caravan park or retirement village, every family should be able to access essential services at a fair price,” he said.

“These reforms will help ensure that embedded network customers are no longer disadvantaged simply because of where they choose to live.”

The Energy and Water Ombudsman NSW estimated 95,400 households lived in residences within electricity embedded networks with a further 64,000 hot water embedded network customers.

The government estimates the number of embedded networks in Australia is growing due to a new business model where developers outsource the ownership of the energy infrastructure beyond the connection point with the electricity or gas distributor.

This can lower building costs for developers and in return the third party can become the monopoly provider of energy to the building.

The overhaul follows the pledge to provide $250 rebates to families who sign up to a website to compare their current energy deal as part of a NSW Energy Bill Saver program, downward pressure on bills through the Electricity Infrastructure Roadmap and further rebates for low income households, family tax benefit recipients and seniors, along with energy account payment assistance.

Originally published as Energy price caps plan for thousands of apartment dwellers