Embedded Networks: Choosing the Right Model
An Embedded Network allows your building to buy electricity in bulk through a main “gate” meter, then use individual sub-meters to distribute and bill that energy to individual units.
But there are two different ways to manage Embedded Networks, and they come with very different cost and risk profiles.
Choose the wrong option, and your building can lose control over its energy contracts and locking you into higher rates for years, or even up to a decade.
Understanding this choice is critical now because highly misleading information is circulating in the strata market.
As we’ll cover shortly, knowing exactly what to look out for will protect your committee from a costly, long-term mistake.
The two different ways to manage an embedded network
There are two ways an Embedded Network can be managed.
1. The “Manager” or “Agent” model: In this model:
You typically buy, own and manage your meters
A Third party provides billing services
You retain full freedom to tender your energy contract (via Watt Utilities) to every major energy retailer. Competitive tenders ensure you can secure the best possible price.
This model is generally lower cost, though it requires slightly more effort and knowledge from the committee.
2. The “Retailer” model:
In this model:
A third party typically owns & manages the meters
The third party provides billing services
You may not have the freedom to run a competitive tender for your energy contract.
This model is usually higher cost but requires slightly less effort and knowledge.
The Retailer Model often involves the third party buying and installing meters. Naturally, they need to recover that investment typically by charging higher energy rates. This frequently results in long-term contracts that can lock your building in for up to 10 years.
A claim worth knowing about
Some providers are falsely claiming that it is a legislative requirement to adopt the retailer model. This is untrue.
There is currently no legislation that requires Body Corporates to move from an Agent (Management) model to the Retailer model.
Your current structure (the Agent Model) remains fully compliant.
If your committee has received correspondence suggesting otherwise, it should be treated with caution.
Selecting the wrong model for your building can result in agreements that increase your costs and severely limit your ability to renew or negotiate your energy contract options to a decade.
What to check if you’re worried
To protect your scheme from being locked into an agreement that may be restrictive, unnecessarily costly or is not the best fit, we recommend the following proactive steps:
If you’ve been told that a switch to the retailer model is required, proceed with caution. For the majority of our clients, the agent model remains the most suitable structure. Always seek independent advice before responding to any claims that a change is mandatory.
Audit your current status: Ensure that all energy contracts are held in the Body Corporate’s name, not the provider’s. This ensures that you – not the biller – remain the ultimate decision-maker.
Use competitive tendering through independent brokers: Independent Brokers act solely in your best interests. They closely monitor pricing so you know when to secure the best rate and they can help you to determine which model best suits your building.
Competitive tendering and why it matters
The core advantage of the Agent Model’s is that you control your energy. When you tender your energy contract to every major energy Retailer, it creates competitive pressure that drives the price down.
Additionally, Smarter Communities clients can access group-buying benefits, securing discounts that are extremely difficult to obtain independently. If you are not yet taking advantage of this, please talk to your strata manager.
When you select the Retailer Model:
you often do not control your energy price
your energy contract may not go to competitive tender
your provider may not monitor market conditions for the best buy time
you may not receive the full benefit of your on-site solar generation
your overall costs are typically higher
You may be locked in for up to a decade
Protecting informed decision-making
Strata bodies should never procure energy without Explicit Informed Consent (EIC). In some states, EIC is a legislative requirement.
If you are uncertain about your current structure or have received information implying that a change is required, independent advice is the best next step.
Watt Utilities has been a trusted advisor to Smarter Communities for over a decade, and to strata bodies for more than 20 years.
To learn more about Embedded Networks contact Watt Utilities.
To discuss your property’s strata management needs or receive a FREE management proposal contact our friendly team.
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