Update on Victoria’s proposal to ‘ban’ embedded networks

Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on facebook
Facebook

In January we reported on updates to the Victorian Government’s proposal to ‘ban’ embedded networks within residential developments. The Expert Panel that was established by the Victorian Government to determine how to implement this ban has now produced a draft report. The Expert Panel is accepting submissions and the consultation period for the draft report closes on 6 August 2021 at 5 PM.

The Expert Panel is particularly interested in submissions on the following:

• The proposed requirement to have renewable or clean energy technologies and what this might look like in new residential private networks
• The most cost-effective approach to upgrading internal metering and associated infrastructure in legacy (existing) embedded networks to readily enable a transition for customers to an on-market retailer of their choice
• Reasonable timeframes for upgrading metering and/or internal infrastructure in legacy (existing) embedded networks, and
• Reasonable timelines for industry to transition to the new regulatory arrangements

Banning embedded networks

The Expert Panel has developed 16 draft recommendations. The first recommendation considers how the proposed ban should be implemented. The Expert Panel propose that the ban be implemented by amendments to the General Exemption Order (GEO). Amendments to the GEO will be easier to implement, provided that they are consistent with the Electricity Industry Act. Amendments to the Electricity Industry Act will be required nonetheless to implement other recommendations from the Expert Panel.

Currently, a variety of exemptions in Victoria are applied automatically i.e. same way that certain entities are deemed to be exempt from the requirement to hold an authorisation in those states that have adopted the National Energy Customer Framework. The Expert Panel has recommended that residential exemptions under the revised GEO should no longer be automatic. Instead, there should be an exemption approval process administered and regulated by the Essential Services Commission.

The revised GEO will have a focus on renewable energy. The Expert Panel note “to be able to meet the obligations under a revised GEO, all residential private networks will need to have renewable energy or other clean energy technologies that will deliver carbon emission reductions in line with Victorian Government policy, and to comply with the enhanced consumer protections.”

A new licence

The Expert Panel has recommended the establishment of a Local Energy Services Licence (LES). It is proposed that entities that currently sell or supply electricity pursuant to an exemption under the GEO should be transitioned to the LES licensing framework. We will consider the proposed LES scheme in detail in a future post.

The LES will be administered by the Essential Services Commission (ESC). Again, the Panel’s recommendation is that LES providers “sell electricity at sites in a way that fosters renewable energy uptake or other clean energy technologies where the benefits must be passed on to customers. This will need to be demonstrated to the ESC.”

The Expert Panel recognise that the LES Scheme will result in a smaller number of providers selling electricity within embedded networks than would have otherwise been the case (if the existing regime had continued).

It is unclear if the Expert Panel anticipates the requirements for an LES to be similar or comparable to the requirements that need to be met to obtain an electricity licence from the ESC. If similar requirements need to be met, then providers will need to demonstrate that they can meet stringent financial, technical and compliance standards.

Consumer protections

One area of key regulatory concern is to give customers within embedded networks, in so far as is practicable, the same consumer protections as are enjoyed by customers who do not live within embedded networks. The Expert Panel has recommended that “Consumers living in all types of residential private networks (including those living in social housing, retirement villages and residential parks) should have access to equal or equivalent consumer protections as on-market customers.”

Access to competition

The Expert Panel has recommended that “for private network customers should have access to the energy retail market and it should be easy for them to transfer to an on market energy retailer.” The practical difficulties of a customer going on-market have been examined by Compliance Quarter previously and were comprehensively considered by the Australian Energy Market Commission.

The Expert Panel recognises that the changes proposed to the GEO and by the implementation of the LES scheme are significant and that they will need to be phased in overtime.

You can read the Expert Panel’s report here: https://engage.vic.gov.au/embedded-networks-review

More to explorer

ESC Review of the Payment Difficulty Framework

In January 2019, the payment difficulty framework commenced in Victoria to ensure that disconnection for non-payment is a last resort and that vulnerable customers are supported to pay for their energy usage. After two years of operation, the payment difficulty framework remains the most stringent customer protection framework in the country and has been considered a success by the Essential Services Commission (ESC). Now the ESC has commenced a review to evaluate and assess the operation of the framework in

Checking bills

Opportunity to shape energy bills of the future

On 2 September 2021, the AER has made a call for submissions on issues that will inform the AER Bill Contents and Billing Requirements Guideline (Guideline). Submissions are due by Wednesday, 22 September 2021.

The purpose of the Guideline is to provide retailers with guidance on preparing and issuing bills to make it easier for residential and small customers to understand billing information. The Guideline is a further step in the AER Strategic Plan 2020-2025 to improve consumer outcomes.

modern building with airplane against a blue sky

An Embedded Network (Guideline) Refresher

If you own, operate or control a private embedded network, you will need to ensure that you hold the exemptions you require. In all of the Eastern States of Australia, this will mean that you will need a network exemption issued pursuant to the AER’s Electricity NSP Registration Exemption Guideline (Network Exemption Guideline). In this post, we answer some of the most common questions when it comes to embedded networks that are regulated by the Network Exemption Guideline.

Leave a Reply

Your email address will not be published. Required fields are marked *