QLD: Q&A How Do We Change Utility Contracts?

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Qld lot owners would like to know about how to change utility contracts such as embedded network operators and gas suppliers. Frank Higginson, Hynes Legal and William Marquand, Tower Body Corporate provide the following responses.

Table of Contents:

• QUESTION: We’ve arranged for a much better deal on Hot water and Gas. Do we have to wait until our AGM to get the contract approved or can we set it in motion now and ratify the decision at the AGM?
• QUESTION: What is the process the Body Corporate Committee will need to follow to change to another Embedded Network Operator?

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Question: We’ve arranged for a much better deal on Hot water and Gas. Do we have to wait until our AGM to get the contract approved or can we set it in motion now and ratify the decision at the AGM? The contract was voted on by the Committee two month ago.

Answer: Depending on the limitations the contract proposal may need to be formally ratified at a general or committee meeting. These can be called at any time so there is no need to wait for the AGM.

Generally, the role of the Strata Committee is the day to day administration of the Body Corporate – that includes agreeing on items such as utility contracts. Providing the Committee had a transparent process for selecting the new provider that may be sufficient.

However, before a contract can be implemented you need to consider any restrictions on the Committee’s decision making authority such as spending limits, the nature of the scheme or the need to get multiple quotes. Your strata manager should be able to review these for you and advise of any requirements for your plan.

Depending on the limitations the contract proposal may need to be formally ratified at a general or committee meeting. These can be called at any time so there is no need to wait for the AGM.

William Marquand
Tower Body Corporate
E: [email protected]
P: 07 5609 4924

This post appears in Strata News #430.

Question: What is the process the Body Corporate Committee will need to follow to change to another Embedded Network Operator?

Our apartment complex (<5 years old) consists of 100+ residential lots and a number of commercial lots. The embedded network equipment was installed by a major energy provider who bills the Body Corporate (common area usage only) and each of the lots individually (monthly). The energy provider installed the metering equipment at its own cost.

Termination of the existing agreement requires 6 months notice. The Body Corporate Committee has been approached by a number of Embedded Network Operators (ENO) offering significantly lower tariffs than those currently being charged. What is the process the BCC will need to follow to change to another ENO? For example, does the Body Corporate Committee need to seek formal approval from the BC to proceed? What type of resolution would need to be passed?

Answer: It is 100% a contractual issue. One thing to be aware of is that some providers build the capital costs of a system into the tariffs and have them paid back over a period. This avoids the need for an up front payment.

William Marquand, Tower Body Corporate:

The relationship with your embedded network supplier will be contractual in nature so the strata basics of changing to a new contractor would be the same as those required for any change of contract. Given the size and nature of the contract this is most likely to be via a general meeting with a majority decision on motions for termination of the existing contract and appointment of the new supplier. Your strata manager should be able to advise you on the requirements for your plan.

Any time you are changing a contract you should consider what effect the termination will bring and what the new contractor will provide. This is especially true of an embedded network where the costs of change could be substantial. It would be worth having a lawyer review the existing contract with your current supplier to fully understand the implications of the termination clauses and what exactly you would be handing over at the point of change from one supplier to the next. For example, you should be completely clear on which party owns the installed network equipment on finalisation of the contract or any costs for the transfer of this. In turn, this knowledge may affect any deals offered new suppliers.

We would recommend that any new supplier considered be a member of the Energy and Water Ombudsman Queensland’s (EWOQ) regulatory scheme. This will allow you access to EWOQs dispute resolution services in the event of any issues: EWOQs Embedded Networks

Frank Higginson, Hynes Legal:

It is 100% a contractual issue. One thing to be aware of is that some providers build the capital costs of a system into the tariffs and have them paid back over a period. This avoids the need for an up front payment.

William Marquand
Tower Body Corporate
E: [email protected]
P: 07 5609 4924

Frank Higginson
E: [email protected]
P: 07 3193 0500
W: http://www.hyneslegal.com.au

This post appears in Strata News #428.

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