Modernising Electricity Regulation: The AES Framework and Embedded Networks in Western Australia

Modernising Electricity Regulation: The AES Framework and Embedded Networks in Western Australia

Embedded Networks, WA Energy Compliance
Background The existing licensing framework overseeing the sale and supply of electricity in Western Australia (WA) has struggled to adapt to the rapid expansion of emerging and atypical electricity business models in recent years. To address this, in 2019, the then Minister for Energy commissioned Energy Policy WA to assess the regulatory framework in Western Australia. In 2020, Energy Policy WA initiated consultations on a proposed regulatory framework for various categories of 'alternative electricity services' called the Alternative Electricity Services (AES) registration framework. This framework aims to apply customer protection obligations to persons providing electricity services through atypical business models not covered by the existing licensing framework, or where the current framework is deemed inadequate. Legislative amendments to the Electricity Industry Act 2004 (WA) to give effect to the AES…
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The Victorian Renewable Energy Condition (embedded networks)

The Victorian Renewable Energy Condition (embedded networks)

Embedded Networks, Victorian Energy
In response to an enquiry into embedded networks in Victoria, the Victorian government gazetted the 2022 General Exemption Order with new requirements for residential embedded network. Chief among those was the 'Renewable Energy Condition' that applies to any entity operating under the VR2 exemption. Let's delve into the specifics of when this condition applies, how it operates, and the implications for compliance. Anyone who proposes to rely on the VR2 exemption must ensure that they obtain independent legal advice- noting that this article is a summary and is not intended to be an exhaustive review of relevant compliance obligations. Applicability of the Renewable Energy Condition The renewable energy condition applies to new embedded networks with 10 or more residential customers. An embedded network is a private electricity network that serves multiple premises and is…
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AER’s Comprehensive Review of the Exemptions Framework for Embedded Networks

AER’s Comprehensive Review of the Exemptions Framework for Embedded Networks

AU Energy Compliance, Embedded Networks
AER's Comprehensive Review of the Exemptions Framework for Embedded NetworksThe Australian Energy Regulator (AER) is undertaking an extensive review of the exemptions framework for embedded networks, as revealed in their recent issues paper dated November 2023. The review comes in the wake of rapid growth in embedded networks and mounting concerns about customer outcomes. This article delves into the details of the AER's review, presenting the key issues and proposed changes that could reshape the future of embedded networks in Australia. The AER has released a comprehensive issues paper signalling a deep dive into the regulatory exemptions for embedded networks. As the energy landscape evolves and embedded networks proliferate, the AER's review underscores the paramount importance of consumer protection and market transparency. Embedded Networks Under the Microscope Embedded networks are…
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Membership of Ombudsman Scheme: A Mandatory Requirement for Exempt Operators

Membership of Ombudsman Scheme: A Mandatory Requirement for Exempt Operators

Compliance, Embedded Networks
The Australian Energy Regulator (AER) mandates that all exempt operators must be members of an energy ombudsman scheme for each jurisdiction where they sell energy to exempt customers. This requirement is not just a mere formality—it is a significant component of safeguarding customer rights and ensuring a fair and equitable energy market. What are Exempt Operators? Before diving into the significance of the ombudsman scheme, it's important to understand who exempt operators are. In the energy sector, exempt operators are entities that sell energy to a specific site or to customers with whom they already have a relationship. They are covered under what is called a 'retail exemption'. These exemptions apply to a range of energy selling activities, often seen in scenarios such as landlords recovering energy costs from their…
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IPART review into Embedded Networks in NSW

IPART review into Embedded Networks in NSW

AU Energy Compliance, Embedded Networks
The Independent Pricing and Regulatory Tribunal (IPART) has been requested by the Hon. Victor Dominello MP, Minister for Customer Service, to investigate and report on embedded network issues in New South Wales (NSW). Embedded networks are private energy networks that serve multiple customers and are connected to another distribution or transmission system in the national grid. They are typically found in residential developments, shopping centers, caravan parks, and other lend lease communities. The investigation aims to address regulatory gaps in customer protection frameworks and ensure fair pricing for customers in embedded networks. Proposed Changes and Impact on Businesses: IPART will develop appropriate methodologies for setting maximum prices for hot and chilled water supplied through embedded networks. The possibility of prohibiting new embedded networks for hot and chilled water in NSW…
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Process Overview: Converting a site into an embedded network

Process Overview: Converting a site into an embedded network

Embedded Networks
Converting an existing site into an embedded or exempt network is a complex process that requires careful consideration of the relevant regulations and requirements. This guide outlines the steps required to convert a site into an embedded network in those states that have adopted the National Energy Customer Framework (NECF). Step 1: Prior to Lodging an Application Before lodging an application for approval with the Australian Energy Regulator (AER), the prospective Exempt Network Operator must inform the relevant registered distributor in writing of the proposed conversion. Step 2: Provision of Retrofit Information The prospective Exempt Network Operator must provide notice, by letter, to all tenants at the retrofit location, of the plan to install an embedded or exempt network at the site. The prospective Exempt Network Operator must provide each…
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Our submission to Ausgrid’s Draft Plan 2024-2029

Our submission to Ausgrid’s Draft Plan 2024-2029

AU Energy Compliance, Embedded Networks
NSW distributor Ausgrid is proposing, in its draft plan 2024-2029, to introduce new embedded network tariffs that would have the effect of increasing network costs by approximately 30%. The reasons that Ausgrid advance for the proposed EN Tariffs centre around the nebulous concepts of equity and fairness to other network users. When comparing the electricity market today to the electricity market in April or May 2022, we see that there are fewer market offers available for consumers, higher prices on most market offers, and fewer retailers (with 8 retailers entering the Retailer of Last Resort scheme since 1 May 2022). Against this background, a proposal to introduce EN Tariffs that would result in a ~30% increase in network charges (Ausgrid’s Pricing Directions Paper for 2024-2029 para 4.4.3), needs to be…
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NSW Legislative Assembly Law and Safety Committee’s inquiry into embedded networks

NSW Legislative Assembly Law and Safety Committee’s inquiry into embedded networks

Embedded Networks
The NSW Legislative Assembly’s inquiry into embedded networks conducted a hearing on Friday, 12 August 2022, with witnesses representing consumer groups, industry and government. It was evident that the Law and Safety Committee is deeply concerned by a number of the issues raised by individual and group submissions to the inquiry, and, as the chair noted, this is a unique situation where even industry is calling for greater regulation. Potential outcomes There are three potential outcomes from this inquiry. These are: NSW follows VIC in implementing regulations to stifle the growth of embedded networks;NSW amends s 132A of the Strata Schemes Management Act 2015 so that all embedded network agreements (as between operators and owners corporations) have a maximum term of 3 years; orNSW waits for the AER to complete…
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