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 will be considered.
- IPART will develop appropriate methodologies for setting maximum prices for gas supplied through embedded networks.
- The appropriateness of the Commonwealth Government’s Default Market Offer as the maximum price for electricity embedded networks will be assessed, or a different method may be used.
- A compliance and enforcement framework for new price protections will be established.
These changes may impact businesses operating embedded networks by potentially limiting their pricing flexibility and introducing new regulatory requirements. Additionally, the prohibition of new embedded networks for hot and chilled water could limit business opportunities in this sector.
Timeline for Review:
IPART (at https://www.ipart.nsw.gov.au/The_future_of_embedded_networks_in_NSW) is consulting on the terms of reference and submission are due by 14 April 2023.
IPART is required to provide a final report to the NSW Government within 9 months of the terms of reference being finalized. A draft report will be published for public consultation prior to finalizing the final report.
From the perspective of those affected by the change, potential consequences from the proposed changes may include:
- Reduced pricing flexibility for embedded network providers, potentially impacting their profitability.
- Increased regulatory burden and compliance costs for businesses operating embedded networks.
- Limitations on business opportunities in the hot and chilled water embedded network sector if new networks are prohibited.
- Potential negative impacts on innovation and sustainable technologies in the embedded network industry due to increased regulation and pricing restrictions.