Know your rights and obligations as retail competition comes to electricity customers in embedded networks

If you are a customer operating in an embedded network or a landlord operating such a network, times are about to change. The current constraints limiting customers’ access to energy retailers and consumption data may soon be a thing of the past following AEMO’s (Australian Energy Market Operator) submission to the AEMC (Australian Energy Market Commission) in May this year requesting a rule change.

The proposed solution is to create a new category of service provider: an ‘Embedded Network Manager’ (ENM) to manage embedded network customers. This would allow full retail contestability, offering current embedded network customers access to competitive offers from energy retailers.

Embedded networks are private networks which serve multiple premises and are connected to a distribution system within the National Electricity Market (NEM). Common examples include shopping centres, retirement villages, caravan parks, apartment blocks and office buildings. There are approximately 500 major embedded networks within the NEM and many thousands of smaller embedded networks.
 

The challenges of being an ‘off market’ energy customer


The majority of customers within an embedded network in Australia are classed as ‘off-market’ as they are not recognised or visible within the NEM. This also means that they are billed by an Embedded Network Operator (ENO), not an energy retailer, who may be a landlord or property management group. Although there is a compliance and obligation framework protecting off-market customers, the control of data, price transparency and correct invoicing may be lacking. For example, in most arrangements, the ENO will be charging off-market customers the highest standing offer tariff, where as an on-market customer could have access to negotiable retail rates where tariff discounts can range between 5-30%, depending on state.
 

Choice of retailer
 

The major gap in current regulatory arrangements is the lack of structure surrounding the embedded network customer’s ability to have a choice of retailer, whether this is an off-market customer wishing to become an on-market customer, or an on-market customer wishing to change retailers.

The new rule changes propose to solve this by appointing an Embedded Network Manager, who will be primarily responsible for managing the transfer of customers between the ENO and energy retailers.
 

What does this mean for customers and embedded network operators?


The new rule change is anticipated to be fully regulated and effective from December 2017. This will allow enough time for AEMO to adjust and appoint all necessary changes, and also falls in line with new metering competition regulations.
In the interim period, the absence of a sufficient framework covering embedded networks can be a regulatory minefield for customers wanting to know if they are being charged correctly or their rights to consumption data. It can also be challenging at time for embedded network operators facing more scrutiny and questioning from customers in preparation of the applicability of the new rules.
 

Energetics can help


Our team of experts can provide bespoke advisory and support services focusing on the specific requirements of your embedded network. To learn more, please contact of our energy markets team and we will be happy to assist.

 

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