What are the advantages of an Electrical Embedded Network?9 August 2017
In an earlier insight post (Link to what is an EEN post?) we described what an electrical embedded network is and how it works, but we only briefly talked about the advantages.
What we did talk about, and this is a point that we will talk about repeatedly, is that a well designed and well run electrical embedded network should deliver advantages to everyone and by everyone we mean every occupier, either owner or tenant and to the Owners Corporation (Body Corporate, Strata Community etc.). If an existing network doesn’t do this, or a planned one isn’t going to, have a look at the model and start asking some questions; of your OC / BC, of the Builder and Developer or of your Manager.
In a large development, there can be a large surplus delivered for the building and if it isn’t going to the building, just where is it going and how much is this impacting on what should be a building specific advantage?
It’s never a good thing to question the practices of others in your industry, but we genuinely believe that the old-fashioned model for embedded networks is broken and that there is a better way. A better way to deliver value to the building. A better way to be a relevant market competitor and to deliver value to the electricity consumers. The Developer and the Embedded Network Operator (ENO), should not be the ones taking the long-term value out of the building. Sure, there are some costs to set up a network and some of these can be substantial and it is only fair that these costs should be recouped. But once it’s up and running, everyone should start to benefit; the ENO by being paid fairly for the service they provide, the occupiers by being charged a fair rate for their electricity consumption and the building owners by deriving a surplus that is used to benefit the building. Win, win, win.
Owners Corporation / Body Corporate / Strata Advantages
The key advantage to the building owners in an electrical embedded network is the potential to earn a surplus between the wholesale supply cost of electricity to the building and the retail sale price to occupiers. If this isn’t happening, there is little real purpose in having the network in place.
When a surplus is earned, this can be applied immediately to several areas. The most common place surplus is used is to cover the cost of Common Area electricity. This immediately brings down the cost to the owners of running the building. This means lower fees.
Another method is to deposit all or part of the funds into the maintenance sinking fund. This helps to minimise the impact of unexpected or planned maintenance activities. Which means lower fees.
There are other ways that the surplus can be utilised and these will vary from building to building depending on needs, but the one defining point is that an electrical embedded network should serve to lower costs to owners.
All of which combined lead to one single point and that is lower fees. Lower fees make properties easier to sell. Lower fees make properties cheaper to live in. Lower fees make investments less costly.
Simple, all the above plus competitive market rates. What more do you need?
For a tenant in an electrical embedded network the most important advantage you should receive is that your electricity costs should be no more, if not better, than the price you would expect to pay with a traditional retailer. What’s more, this pricing should come to you without being required to commit to a pay on time contract where your pricing is determined by paying by direct debit from your savings account or your credit card. Why is this important? Apart from the obvious, federal regulations grant us all the right of choice to our energy retailer to ensure that consumers have power over their power costs. (There will be more about this in an upcoming post titled The Power of Choice). In an electrical embedded network, this right exists, but it is not as easy as it is in non-embedded networks. If your choice has been limited in some way, then your pricing should be fair.
If your electrical embedded network isn’t an advantage, perhaps it’s time to think about the alternatives?