In properties with electricity supplied via an Embedded Network, the Strata Scheme (usually through the appointed Strata Management Company) manages the delivery and distribution of electricity to all tenants. The electricity charges cover both fixed costs to maintain the network and variable costs based on each tenant’s consumption.
This article explains how these charges are calculated and outlines the current challenges in Western Australia related to electricity costs and recovery.
Daily Supply Charge
The Daily Supply Charge is a fixed fee that all tenants pay, regardless of usage. It covers:
Connecting the building to the local electricity grid
Maintaining infrastructure (e.g., meters, wiring, transformers)
Meter reading and network administration
This charge is typically shared equally among all tenants, ensuring everyone contributes fairly to maintaining the network.
Consumption Charges (Per kWh)
Tenants are also charged for electricity consumed in kilowatt-hours (kWh), which powers lights, appliances, and other devices. The Consumption Charge is calculated by multiplying the amount used by each resident (generally obtained via sub-meter readings) by the per kWh rate set by the Strata Scheme. This rate is influenced by the wholesale electricity price, along with operational costs (e.g., network fees, administration).
WA regulation states that the maximum consumption rate to be charged to residential tenants must be in alignment with the A1 residential gazetted tariff.
Additional Charges
Additional charges may apply, depending on the structure of the embedded network, including Metering Charges (For installing and maintaining individual meters), Regulatory Fees and any Late Payment Fees.
Current Challenges with WA Embedded Network Electricity Costs and Recovery
Embedded networks offer cost savings, simplified billing, and sustainable energy options, but Strata Schemes in WA are facing challenges due to rising electricity costs, increased infrastructure maintenance, future regulations and government tariffs that are not keeping pace with inflation.
With rising wholesale electricity costs, higher infrastructure maintenance expenses, and government-subsidized tariffs (like the A1 residential gazetted tariff) lagging behind inflation, embedded networks are seeing reduced margins.
To remain fair, Strata schemes must adjust charges equitably for tenants while maintaining the integrity of the embedded network. With small increases in government tariffs, embedded networks may find it harder to offer the same cost savings, particularly as wholesale electricity costs outpace tariff growth.
However, these challenges reinforce the benefit of Strata Schemes investing in sustainable energy options. Deploying solar or other renewable energy sources can help lower costs and reduce reliance on the grid. By generating electricity on-site, solar energy can decrease grid consumption and overall electricity costs, providing a buffer against rising wholesale prices.
As electricity prices rise and government tariffs lag behind inflation, Strata schemes must balance cost increases and maintenance with the need to maintain value for tenants. While potential savings from embedded networks may decrease, their core benefits—including simplified billing, access to renewable energy, and ongoing cost savings—remain essential. These benefits are crucial for the long-term viability of embedded networks in an increasingly complex energy market.
This article was brought to you by EnergyTec
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