On-selling Electricity - new laws commence
Posted on January 02, 2013
Landlords, do you on-sell electricity to your tenants? Property managers, do you on-sell electricity to tenants on behalf of landlords?
If you answer yes to one of these questions, laws commencing on 1 February 2013 place new requirements on you.
What is happening?
If you on-sell electricity to tenants, you will need to register with the Australian Energy Regulator (AER) or obtain an exemption from having to do so.
As registration is burdensome for most landlords, exemptions from registration exist for those who satisfy certain conditions.
Who does this affect?
This affects you if you on-sell electricity to tenants. It does not affect you if tenants buy electricity directly from a third party retailer.
If also affects property managers if they control and oversee the on-selling of electricity to tenants on behalf of landlords.
What must you do?
You must register for an exemption with the AER.
Depending on your circumstances, you may need to register more than one exemption.
What kind of exemptions are there?
First, you must register as a network service provider. This is because if you on-sell electricity, the wiring in your building is taken to be a distribution system. You cannot operate a distribution system without being registered with the AER or exempted from doing so. Subject to satisfying certain conditions, you can apply for a class NR1 exemption which registers you as a network service provider
Second, you may also need to make an application for a registration for the actual on-selling of electricity. There are two classes of registration, class D1 and class R1.
Class D1 is where you on-sell electricity to less than 10 small customers. Small customers are tenants who use less than 100 megawatt hours per annum of electricity. Certain conditions apply. If you satisfy those conditions then the exemption is automatic and you do not need to apply for a class D1 exemption. If you don’t meet them you will need to make an individual application for exemption. Either way, you must still apply for a class NR1 exemption.
Class R1 is where you sell to 10 or more small customers. In this case, the exemption is not automatic, and you must apply for an exemption. You must also apply for a class NR1 exemption.
You are likely to fall into one of two categories:
- If you sell to less than 10 small customers, and meet certain conditions, you need only apply for a class NR1 exemption.
- If you sell to 10 or more small customers, you must apply for a class NR1 exemption and class R1 exemption.
Other exemptions do apply in certain circumstances.
Who must apply?
Landlords must apply. If property managers manage the on-selling, they must also apply.
When do I need to apply?
Class NR1 exemptions have been available since 1 January 2012. If you are required to apply for a class NR1 exemption but have not done so, you must do so now.
Class D1 and R1 exemptions apply from 1 February 2013.
What are the consequences for non-compliance?
Non compliance results in a substantial fine plus a daily fine for each day you do not have an exemption.
Other changes
Other changes to regulations also scheduled to commence on 1 February 2013 may affect leases entered into before 1 January 2003. If a tenant under such a lease does not have an effective right of access to an electricity retailer of their choice, you will have to obtain a licence from the Essential Services Commission of South Australia.
An effective right of access means the tenant must:
- have access to and use the inset network for the purpose of consuming electricity purchased by a retailer of their choice; and
- install, maintain and use meters without any charge being payable by them (other than to the retailer).
Obtaining a licence is likely to be undesireable for most landlords, so you should ensure that you lease is amended to give your tenant an effective right of access.
How can we help?
We can determine if these new laws apply to you, what class of exemption may apply, what conditions you must satisfy and make an exemption application for you. If necessary we can assist with amending your leases or other documentation with your tenants.