As a Commercial Landlord On-Selling Gas and Electricity to a Tenant, Are You Sure your Services Charge is Enforceable?

The National Energy Retail Law (NERL) regulates the sale of gas and electricity, though with variations in different States. A landlord, on-selling power to tenants, have to hold either an authorisation or an exemption under the NERL. These are not necessarily automatic.

A landlord, 148 Brunswick Street Pty Ltd (148,) was entitled to charge its tenant, under its service charge clause, for electricity at the price it was being charged by its supplier. Several issues arose between them, including the enforceability of the services charge clause.

The Federal Court of Australia recently held, in Pipe Networks Pty Ltd v 148 Brunswick Street Pty Ltd (2019) FCA 598, that the clause in the lease which allowed the landlord to charge its tenant electricity was unenforceable. This was because it did not have the required authorisation or was entitled to an exemption.

What Does It Mean?

Landlords who are on-selling gas and electricity to their tenants must have a retail authorisation or exemption under the NERL. Where a commercial property is concerned a deemed exemption only applies if there are less than ten tenants buying gas or electricity.

The case is a reminder to commercial landlords to check that they are registered or fall within the exemption category under the NERL.

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