Hundreds of thousands of people living and working in embedded electricity networks like apartment buildings, shopping centres and retirement villages will have access to the same rights, protections and prices as everyone else, under final reforms proposed today by the Australian Energy Market Commission (AEMC).

The Commission has published a final blueprint to give the fast-rising number of people in these private networks the same protections as customers who are directly connected to the grid. 

AEMC Chief Executive Anne Pearson said many of these customers are locked into uncompetitive arrangements and find it hard to change retailers because they don’t have a market-compliant meter.

“Customers should be able to shop around for the best deal. We’re stepping in with new laws and regulations so all customers can have choice,” said Mrs Pearson.

“The changes would strengthen regulation so people in embedded networks can’t be treated as second class customers.”

“Everyone should have equal access to consumer protections on billing information, payment options, hardship support and notification of planned outages, no matter who they buy their electricity from.” 

After setting out a draft reform package for embedded networks in January 2019, the AEMC has now finalised its recommendations following extensive consultation with consumers, embedded network operators, retailers, developers, ombudsmen, state governments and renewable energy advocates.

The changes would give embedded network customers:

• improved consumer protections in areas including disconnections, billing information, payment options and notification of planned outages
• new protections for the first time including access to customer hardship programs and continuity of supply in the event of retailer failure
• stronger regulation which enhances the ability of the Australian Energy Regulator to enforce compliance with obligations to provide protections
• access to competitively priced market offers by making it possible for customers to choose the retailer and requiring better industry financial and data transfer processes to help more retailers compete in embedded networks 
• market-compliant meters that are registered with AEMO  so it’s easier for customers to switch retailer and get better information about their usage and bills
• the same rights as grid-connected customers when upgrading their connections eg when installing electric vehicle charging stations within apartment blocks
• improved access to state government services such as concession schemes and emergency financial assistance, provide access to independent dispute resolution, and introduce reliability protections (these changes are recommended to state and territory governments).

Mrs Pearson said that embedded networks can offer important benefits to consumers, provided they are appropriately regulated and customers are fully informed when they sign up to these deals which can last for many years. 

“Embedded networks can include innovative products and services to help manage energy costs such as on-site solar generation and battery storage and demand management services.

“That’s why our recommendations aim to strike a balance by providing important consumer protections without placing undue costs on owners and operators of embedded networks.” 

Putting reforms into action will require a collaborative effort across governments and market bodies. 

“The COAG Energy Council, Australian Energy Regulator and Australian Energy Market Operator, as well as state governments, regulators and ombudsmen, all have a role to play in delivering these important reforms,” said Mrs Pearson.

This includes a staged plan to transition existing embedded networks to the new arrangements, although some very small embedded networks like caravan parks will continue to be exempt.

This review is part of the AEMC’s consumer action plan.

Media: Prudence Anderson, Communication Director, 0404 821 935 or DL (02) 8296 7817.

BACKGROUND

What embedded networks are affected by these recommendations?

Embedded networks are private electricity networks which serve multiple customers from a connection point which is managed by an exempt network service provider. 

Generally, these exempt network service providers on-sell electricity to their customers in these off-market networks like shopping centres, retirement villages, apartment blocks and caravan parks. In recent years, installing and operating embedded networks has evolved into a new business model for parties whose core activity is supplying and selling energy, especially in high density apartment buildings, commercial districts and residential villages. 

This has placed the arrangements for embedded networks, which were originally designed for small networks such as caravan parks where the supply of energy was incidental to the main business activity, under stress. In late 2017, the AEMC found that these arrangements were no longer fit for purpose in our Review of regulatory arrangements for embedded networks). Today’s reform package delivers on the AEMC’s recommendations in that review.

Who are the market bodies?

AEMC - Australian Energy Market Commission is the rule maker, market developer and expert adviser to governments. It protects consumers and achieves the right trade-off between cost, reliability and security.

AEMO - Australian Energy Market Operator is the electricity and gas systems and market operator. It works with industry to keep the lights on.

AER - Australian Energy Regulator is the economic regulator in charge of rules compliance. It policies the system and monitors the market.