Embedded Network Action Plan – New South Wales

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The Embedded Network Action Plan sets expectations for embedded network operators to better engage with their customers. This comes after reviews and inquiries found that some customers of embedded networks face poor outcomes due to gaps in the current regulatory framework.

The NSW Government Embedded Network Action Plan aims to provide equitable consumer and price protections for customers of embedded networks. The plan outlines immediate and medium-term actions to improve outcomes for these customers.

Immediate actions:

  1. Introduce a maximum price for energy sold to customers of hot and chilled water embedded networks and gas embedded networks to protect against unreasonably high prices.
  2. Release a Ministerial Statement of Expectations (see below)

Medium-term actions:

  1. Implement policy updates to strengthen consumer protections for hot and chilled water embedded network users.
  2. Broaden the Energy Accounts Payment Assistance (EAPA) program to offer equal emergency financial support for all embedded network customers.
  3. Initiate an Independent Pricing and Review Tribunal (IPART) NSW review to:
    • Establish maximum pricing for hot and chilled water and gas services in embedded networks.
    • Evaluate the long-term benefits of new hot and chilled water embedded networks and consider prohibiting third-party operators.
    • Assess the need for a lower maximum price for electricity embedded networks and identify the optimal calculation method.
  1. Enhance transparency by informing prospective buyers and renters about embedded network arrangements prior to property transactions.
  2. Adopt recommendation 120 from the  Statutory Review of the Strata Schemes Development Act 2015 and Strata Schemes Management Act 2015 to safeguard electricity embedded network customers in strata schemes against extended contract terms.
  3. Advocate at the national level to:
    • Revise the AER Retail Exempt Selling Guideline for improved consumer protections in embedded networks.
    • Streamline access to retail competition for embedded network customers, including modifications to the National Meter Identifier process.
    • Optimise the approval process for new retailer and network exemptions to ensure the long-term interests of consumers in new embedded networks.

What is the Ministerial Statement of Expectations?

This statement is part of the Embedded Network Action Plan, the aim of the plan is to improve outcomes and address protection gaps for embedded network customers by extending the same consumer and price protections that customers in traditional energy supply arrangements enjoy.

The statement applies to:

-authorised electricity retailers operating embedded networks; and

– operators of hot or chilled water embedded networks.

Key expectations for embedded network operators:

  1. Customers of embedded networks should have the same consumer protections as other customers.
  2. By December 1, 2023, hot and chilled water embedded network operators should bill customers only for the energy input to the hot or chilled water supply. This requires a dedicated water meter and gas or electricity meter.
  3. The NSW Government views the sale of hot and chilled water as the sale of energy when billed for energy input.
  4. By December 1, 2023, hot and chilled water embedded network operators should apply national energy customer framework obligations to hot and chilled water supply, ensuring basic consumer protections.
  5. Starting July 1, 2023, authorised electricity retailers in embedded networks should comply with the maximum price set by the Australian Energy Regulator.

The government plans to make these expectations legally enforceable for embedded network operators. The Energy and Water Ombudsman NSW will report non-compliance, and the government will consult with the operator.

Submissions

To make a submission or ask a question, reach out to the Energy Consumer and Competition Policy team at energy.consumerpolicy@dpie.nsw.gov.au. The deadline for submissions is 5:00 pm AEDT on Friday, March 31, 2023.

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