16 September 2021

Passing on electricity usage and supply costs to residents

Due to the nature and set-up of retirement villages, it is common for village operators to on-supply electricity and to charge the usage and supply costs to residents.

In a strata village, the strata company is ultimately responsible for the common connection to the electricity provider and the common electrical system within the village. The appointed strata manager is most likely to be the village operator.

This bulletin aims to explain some of the on-selling requirements.

What is the on-supply of electricity?

The on-supply of electricity is when an entity, such as a village operator or strata manager, purchases electricity from a licensed supplier, such as Synergy or Horizon Power, through a master meter. This operator may on-sell the electricity to its residential customers, being the village’s residents, under the Electricity Industry Exemption Order 2005 (Exemption Order).

Calculation of a resident’s consumption costs

Essentially, the terms and conditions of a residence contract determines the method an operator will use to calculate a resident’s electricity consumption and supply costs, unless you are an owner in a strata titled retirement village.

One method to calculate a resident’s contribution is through the use of a sub-meter, if available at the property. A reading of the sub-meter will determine the actual electricity consumption for the individual property. If registered, the sub-meters may be read by the licensed supplier and appear on the account sent to the village operator. The consumption cost can be directly passed on to the resident.

If the sub-meter is unregistered, the operator will do their own reading of the sub-meter and calculate the resident’s charge using the respective electricity tariff costs.

For properties without a sub-meter, the residence contract must have a clause that outlines the calculation method that applies for the village. This may simply set out a resident’s contribution as a fraction of the total number of dwellings in the village. For example, in a village with ten dwellings, each resident may be responsible for one tenth of the total electricity costs charged by the licensed supplier, regardless of actual consumption of individual residents.

However, even if the residence contract specifies a method, there are some limits to the amount an operator can charge a resident for consumption under the Exemption Order. When Synergy or Horizon Power supplies the electricity, the Exemption Order limits the amount that can be charged to a resident to the standard residential consumption tariff, being the A1 (Synergy) and A2 (Horizon Power) tariff rates. These tariffs are available on Energy Policy WA’s Household electricity pricing page.

If another licensed retailer supplies the electricity, the cap on consumption costs does not apply.

If the on-seller generates the electricity, such as in the case of solar, the cap is whatever amount is necessary to recover the cost of generation of the electricity.

Calculation of electricity services costs

Charges for electricity services differ from consumption charges. The Exemption Order defines electricity services. They include the supply, maintenance and reading of a property’s electrical supply meter. Electricity services also includes the preparation and issue of electricity supply accounts.

If the village is located within a Synergy or Horizon Power licensed area, the operator can only charge a resident the A1 and A2 tariff daily supply charge. This is regardless of which licensed retailer supplies electricity to the village.

If the village is located outside of a Synergy or Horizon Power licensed area, there are no restrictions on what can be charged. Information on the distribution, supply and sale of electricity in Western Australia, as well as maps of the licensed areas, is available on Energy Policy WA’s Electricity industry page.

Electricity service costs that an operator cannot charge to residents

Under the Exemption Order, the electricity service cost includes administrative activities, such as reading the meter or preparing accounts. This means that the operator cannot pass on administrative costs, such as a meter reading cost, to residents who are already being charged the A1 or A2 electricity service costs.

Electricity service costs that an operator could charge to residents

While the licensed supplier might only charge the operator a single amount for the daily supply charge, the Exemption Order allows the operator to charge each resident individually the daily residential supply tariff. This means that an operator may receive multiple payments for the total daily supply charge.

A residence contract may, however, include a clause that limits the ability of the operator to pass on the full daily charge to each resident.

Information an operator must provide each resident

The Exemption Order states what information an on-seller must supply to its customers. For an operator, this information must:

• be easily accessible, such as by placing the information on a noticeboard that all residents have access to, or sending notices to each resident;
• include the quantity of electricity supplied to the resident; and
• include the fees and charges the resident must pay for the usage and supply of electricity.

More information

The Economic Regulation Authority’s Switched On: Energy Consumers Guide contains information on how energy, including electricity, is supplied to properties.

In the first instance, talk to your village operator or strata manager who should be able to explain the on-supply arrangements for your village.

Approach your village residents' committee, as they are also a valuable means of resolving a range of matters through the internal dispute process on your behalf. In a strata village, refer to the scheme by-laws for the dispute resolution process.

If you have any queries or concerns about how the on-selling of electricity is disclosed in your residence contract, please contact Consumer Protection’s Contact Centre on 1300 304 054.

The Energy & Water Ombudsman provides a free and independent dispute resolution service between energy customers and licensed suppliers when they have been unable to resolve an issue themselves. Contact them on 1800 754 004.