Embedded network complaints and case studies

In the Apr-Jun 2021 quarter EWON opened 121 complaints from embedded network customers. These customers were complaining about a range of energy service providers:

• authorised energy retailers: 98
• authorised gas retailers: 11
• exempt electricity sellers: 9
• licenced electricity networks: 2
• water (not allocated): 1

EWON closed 127 complaints from customers whose electricity or gas (including hot water) is supplied through an embedded network.

Table 7 -Top core issues for embedded network complaints closed this quarter 

Table 8 - Top issues for embedded network complaints closed this quarter 

Embedded network case studies

No access to retail competition

The National Energy Customer Framework (NECF) is designed around the expectation that retail competition will drive the benefits energy customers receive and help maintain consumer satisfaction and confidence. Despite this, access to retail competition remains impractical for the growing number of embedded network customers nationally. 

Over the last decade, EWON has rarely had contact from embedded network customers who have successfully opened an on-market energy account with the retailer of their choice. However, it appears that some retailers are now making energy-only offers available to embedded network customers. This quarter, EWON received complaints from two different customers, located in different embedded networks, who were following the process to take up an on-market energy contract. 

These two case studies demonstrate the difficulties customers have completing this process, and the added complexities they face when managing two sets of energy charges – the pass-through network charges from the embedded network operator (or billing agent) and the energy-only charges from their energy retailer. In the first case study, this added complexity was enough to discourage the customer from completing the process to access retail competition.

Additional charges stop customer from leaving embedded network

A customer wanted to leave his embedded network and was considering an energy-only offer from an authorised energy retailer. The embedded network operator told him that he would still receive a bill for the network charges that are passed through from the licenced network provider supplying electricity to the parent connection point. The embedded network operator provided the customer with a breakdown of pass-through network charges based on his current usage which totalled $272 for the quarter. The customer was advised that these charges included both fixed elements and variable elements that were based on usage. He was not aware the network charges would be so high or structured in this way.

EWON reviewed the pass-through network charges outlined by the embedded network operator and advised the charges were in line with the network charges set by the licenced network provider supplying the parent connection point. We also noted that this was compliant with the AER exempt network guideline.

The customer said the billing arrangements were not disclosed to him when moving into the building. He noted that the combined energy charges from the new retailer and the pass-through network charges from the embedded network operator were prohibitive and the current process does not make it viable to seek an alternative energy offer. Because of this, he decided he would not leave the embedded network.

Embedded network customer with an on-market energy account seeks clarification over bills

An embedded network customer initially opened an account with the embedded network’s billing agent which was also an authorised energy retailer. In 2020, the customer decided he would seek an energy offer from another authorised energy retailer. The customer found an energy retailer with an offer that was available to embedded network customers and which was also willing to install a digital meter at the premises. 

The customer contacted EWON and advised his preferred  retailer had been attempting to work with the billing agent regarding the pass-through network charges for seven months without success. The customer also complained that he was still receiving energy bills from the billing agent. He said it was unclear what ongoing payments he would need to make to the embedded network operator. He also felt the embedded network billing agent did not follow the correct process for allowing him to leave the embedded network, and the staff he spoke to did not understand what process to follow.

The customer provided EWON with a copy of the bills from his new on-market retailer and the embedded network billing agent. He was confused about why he was receiving bills from two different providers when both bills contained a usage and fixed charge. EWON contacted the billing agent to obtain further information about the network charges. 

We explained that the charges he received from the billing agent were the pass-through charges from the licenced network provider supplying electricity to the parent connection point for the embedded network. The pass-through network charges were calculated using the network tariff set by the licenced distributor which included a fixed charge and charges based on the customer’s electricity usage. The customer was satisfied with EWON’s explanation of the charges from the embedded network billing agent.

The sale of hot water in embedded networks should be regulated as an essential service in NSW

EWON’s recent report Spotlight On: Hot water embedded networks shone a light on the importance of hot water as an essential service, regulation in NSW, the need for residents to be covered by energy specific consumer protections, and why residents living in hot water embedded networks across Australia need access to energy and water Ombudsman schemes now and in the future.

Vulnerable customer receives high and confusing gas bill

This case study focuses on a vulnerable energy consumer living in an embedded network. The customer’s gas account was separated into:

• hot water usage and supply charges – making up 80% of the customer’s gas bills for a 12-month period.
• a fixed daily charge for supplying a gas cooktop service (unmetered gas supply) – making up 20% of the customer’s gas bill for the same period.

The National Energy Retail Law (NERL) defines energy as: ‘electricity or gas or both’. This definition excludes hot water services from the regulatory framework for retail energy services. As this customer’s bill was separated into charges for hot water and unmetered gas, 80% of the customer’s gas bill was not covered by energy specific consumer protections, and the customer was not eligible for the NSW Government Gas Rebate or the Energy Accounts Payment Assistance Scheme. The customer could not rely on the following basic consumer protections that apply to retail gas accounts for other households, including:

• the right to request a review of a disputed bill
• rebates and concessions
• internal dispute resolution procedures
• minimum contractual standards
• protections for vulnerable customers (including payment plans and hardship programs)
• minimum requirements for billing, tariff and payment (including limits on backbilling)
• protections against disconnection.

The customer, a 91-year-old man who suffered health issues and lived alone, was a community housing tenant and lived in a building established as an embedded network. He told EWON he moved into the building 12 months ago and had just received a $1,193 gas bill covering 12 months of gas and hot water usage. The customer thought the gas bill was high and did not accurately reflect his usage. He also had trouble understanding the bill because of his poor vision. 

The customer told EWON he could not afford to pay the bill and was worried if he did not pay by the due date, he may be disconnected. His sole income was from Centrelink and he had been showering in cold water for two months to try and lower his hot water costs. The customer had called his community housing provider and was told his gas usage should only be about $20 a month. He had contacted the billing agent for the embedded network to dispute the bills but he had not received a response.

EWON contacted the billing agent for the embedded network. The billing agent was also an authorised energy retailer and initially said the customer had been billed on a higher-than-average estimated invoice and a technician would be dispatched to check the hot water meter. The billing agent later said the previous 12 months of charges were based on six months of actual meter readings and six months of estimated meter readings. We reviewed the customer’s gas bills and noted they were separated into charges for hot water usage, a fixed charge for hot water supply and a fixed charge for the supply of a gas cooktop service. 

The retailer offered to resolve the complaint by waiving all the usage charges of $503 on the estimated bill for the period covering two quarters. The retailer’s offer left the customer to pay only the fixed charges of $207 for the same period.

The customer accepted the retailer’s offer and requested a payment plan of $40 a fortnight for the $490 balance owing on the account. We asked the retailer to contact the customer directly to discuss his affordability issues and negotiate an affordable payment plan to be established via Centrepay. EWON also ensured that rebates were being applied to the customer’s electricity account and provided the customer with advice and referrals for the available government assistance programs.