Embedded network complaints and case studies

This quarter EWON opened 162 complaints from embedded network customers. We closed 152 complaints from customers whose electricity or gas (including hot water) is supplied through an embedded network. 

Table 5 – Embedded network customer complaints by service provider, July to September 2023 

Table 6 and 7 - Top five core issues and top five issues for embedded network complaints closed.

Calculating charges for residents bills

Customers that live in embedded networks are not just living in new residential apartment buildings, they also live in residential parks and retirement villages.

The rules around the electricity and gas supply are different in residential parks. Some residential park residents now receive bills from authorised retailers; however many still receive bills directly from the owners or managers of the parks. The rules around billing in residential parks can be confusing to customers as they can differ depending on how the park operator chooses to calculate the bill.

In September 2018, the Supreme Court of NSW found that that in order to comply with section 77 of the Residential (Land Lease) Communities Act 2013 (NSW), a residential park operator cannot charge residents more for usage charges than the park operator is charged by its energy retailer. This means that park operators can choose how to calculate the electricity charges as long as the outcome is that a resident is not charged more than the operator has been charged for the electricity they use. It also confirmed the calculation method used by NSW Civil and Administrative Tribunal (NCAT) in the case Reckless v Silva Portfolios Pty Ltd, which is referred to as the Reckless method, met the requirements of the legislation.

To apply the Reckless method, all charges that are separately listed in an operator’s bills are combined and then divided by the total number of kilowatt (kWh) hours the operator has been charged for the whole community. This results in a single per kWh rate. To calculate the correct charge for the customer, the rate per kWh is multiplied by the total kWh used by the customer. This includes fixed charges, and a park operator cannot charge homeowners a separate service availability charge.

EWON is able to review whether a customer has been appropriately charged for the energy that they have consumed. The case studies below highlight some of the complaints that our dispute resolution team have reviewed recently. It also highlights that these residents are also being impacted by the significant price increases that residents connected directly to the electricity network are experiencing.

Case studies 

 Park operator identifies incorrect application of Reckless method

A customer living in a residential park which is part of an embedded network was being billed at $0.29 per kWh for her electricity. She thought that the park operator’s commercial electricity costs were less than $0.10 per kWh and it was not complying with its obligations under the Land Lease Communities Act 2013, which states that the park operator should not charge more for electricity than what they are buying it for from its provider. She also disputed that the rate was increased from $0.23 per kWh to $0.29 per kWh without any warning to park residents.

The customer approached the park owners, but they did not respond or communicate with her. The customer also had a similar issue with the previous owner, and said that after complaining to them, the rate was decreased by $0.10 per kWh.

EWON contacted the park operator which confirmed it had purchased the park in 2021 and the previous park managers continued to operate the park. Our review of the available information found that the park operator used the Reckless method for calculating the bills.

While reviewing the billing, the park operator found out it had incorrectly calculated the electricity for the customer when applying the Reckless method. The park operator calculated the overcharge to be $166, over a two year period. EWON reviewed the calculations and found that the park operator had now appropriately calculated the billing using the Reckless method. We also provided the customer with information about how the method of charging is calculated.

We also noted that the AER Exempt Selling Guidelines states that ‘an exempt person must provide notice to the exempt customer of any change in the exempt customer tariff as soon as practicable and no later than the exempt customer’s next bill’ and that in using the Reckless method, the park operator wouldn’t be able to provide advance notice of rate changes, as it wouldn’t know this until it received its own electricity bill.

 The park operator said further training would be provided to employees and it would also review the billing for all other residents at the park. The customer was satisfied with the information provided and the knowledge that the appropriate calculation would be used for all future bills.

 Customer disputes park operators application of Reckless method

A customer lived in a caravan park which is part of an embedded network. In December 2022 she was billed $0.26 per kWh on her electricity bill, however when she received a bill for January 2023, the price had increased to $0.41 per kWh.

She had seen a copy of the park operator’s bill for the same period, and they were only charged $0.34 per kWh for ‘peak’ usage. She contacted the park operator to dispute the difference in the charges, however it advised her that it was calculated correctly. She explained her understanding was that she should not be charged more than the park operator was being charged by the network for usage, and she thought she was overbilled.

EWON initially referred the complaint to the park operator to speak with the customer, however the customer returned for further assistance as she was unable to resolve the issue. The park operator told her that they had divided the total kWh recorded by the park by the total bill to calculate the charge for her bill. It also advised her she would be charged the increased rate for the entire year.

The customer advised EWON that she disputed the calculation, as the total consumption for the park includes tourist sites, which increased during peak periods, which meant she was paying for part of their usage. She also considered that it is unfair that she was being charged for street usage, running of pools and general areas, rather than just her usage.

EWON contacted the park operator and requested copies of the customer’s bills, and copies of bills for the park’s parent meter. Our review of the available information found that the park operator used the Reckless billing method and had appropriately calculated the single kWh in which he was billed. The park operator had combined all the charges in its bills and then divided it by the total number of kilowatt (kWh) hours the operator had been charged for the whole community and then applied this rate to the consumption used by the customer.

 We provided a working example to the customer for the January 2023 period, highlighting that the park operator was charged a total of $17,416.68 and the total number of kilowatts (kWh) was 42,323.524.

• $17,416.68 divided by 42,323.524 kWh equates to a single rate of 41.2 cents  
• 41.2 cents was multiplied by the customers total usage over January 2023 at 131 kWh 
• this equates to $53.97 and correctly matches the amount charged to the customer by the Park operator.

 Customer unsure if billing calculation was correct due to price increases

A customer contacted EWON because he had received his most recent electricity bill and it had increased significantly. He advised EWON that he was a permanent resident at a residential park, which is part of an embedded network. He had his own electricity meter and received his quarterly bill directly from the park operator.  

In the past he had been billed $0.24 per kWh, however this had now increased to $0.41 per kWh. He was concerned because this was a significant amount, and he did not receive any notice of the price increase. He had spoken to the park operator, and it advised him that the rates are set by the head office and that it would investigate his concerns, however he did not hear from them.  

EWON initially referred the complaint to the park operator to try to resolve the issue with the customer directly, however the customer returned to EWON as the park operator had advised that the Reckless method was used at the park and the bill was correct and payable. The customer was confused about the billing method and wanted to ensure that it had been appropriately applied.  

 EWON contacted the park operator for information and requested copies of the customer’s bills, the park operator’s bills and the customer’s meter data. Our review found that the park operator had now appropriately calculated the billing using the Reckless method and we provided the customer with information about how this was calculated. The customer was happy with the explanation about the billing method and the news that the park operator recently renegotiated a better rate, which would be of benefit to the park residents as it would see a decrease in the charges to his future electricity bills.