The Victorian Government has opened consultation on proposed pricing reforms for embedded networks, following its announcement that it intends to require lower energy prices for households and small businesses in those networks.

The consultation is relevant to residential and small commercial embedded network customers, embedded network operators, exempt sellers and suppliers, licensed retailers operating in embedded networks, owners corporations, retirement villages, caravan parks, shopping centres and providers of bundled energy-related services such as bulk hot water, centralised heating and cooling.

The reforms have not yet been introduced as a Bill. At this stage, the process is a policy consultation led through the Department of Energy, Environment and Climate Action (DEECA), with feedback intended to inform later policy and regulatory decisions.

KEY DATE: Consultation closes at 11:59 pm on Thursday 2 July 2026.

What has been announced?

On 27 May 2026, the Victorian Government announced that it would change the law to require energy companies to offer lower electricity and gas prices, including bundled services, to customers in embedded networks. The Government has said the lower price is intended to commence on 1 July 2027, after consultation with industry and consumers.

The announcement builds on earlier Victorian reforms, including the existing cap on electricity prices for many embedded network customers at the Victorian Default Offer (VDO), and restrictions on most new residential apartment embedded networks unless they meet renewable energy conditions.

DEECA has now released a consultation paper, Reforming prices for customers in embedded networks, seeking evidence on current pricing outcomes and feedback on the design of stronger pricing protections.

Why is the Government consulting?

Embedded networks are private electricity or gas networks that supply multiple customers within a property or site, such as an apartment building, retirement village, caravan park, shopping centre or office complex. Customers may have limited ability to choose their retailer or access competitive market offers.

Victoria already regulates maximum electricity prices for many embedded network customers by reference to the VDO. However, the consultation paper identifies remaining issues. These include customers paying more than competitive market offers, the position of licensed retailers selling into embedded networks, the absence of an equivalent gas price cap, and pricing for bundled services that sit outside traditional energy consumer protection frameworks.

DEECA is seeking evidence about what customers are currently paying and how any new pricing rules should be framed. The consultation is therefore both a policy design exercise and an evidence-gathering process.

What options are being considered?

The consultation paper indicates that the Government is considering stronger, enforceable pricing rules and a new price cap for both electricity and gas services in embedded networks. It is also considering bundled services, including bulk hot water and centralised heating and cooling.

Potential reforms may involve changes to Victoria’s licensing and exemption framework so that pricing protections apply more consistently and can be effectively monitored and enforced. This may include extending price cap obligations to licensed electricity retailers selling to embedded network customers, not only exempt persons under the exemption framework.

For gas, the consultation raises a different issue. Victoria has a Gas Embedded Networks General Exemption Order 2025 for certain legacy gas embedded network distribution activities, but there is not currently an equivalent price cap for gas embedded network customers. The consultation asks whether competitive market offers could inform a gas price cap.

What evidence should clients collect?

DEECA is seeking practical evidence, not only high-level policy views. Relevant material may include recent bills, tariff schedules, customer numbers, contract terms, pricing methodologies, cost inputs, complaint data and information about the operational effect of any proposed price cap.

Operators should be ready to explain the difference between wholesale energy costs, network costs, metering, administration, compliance costs, capital recovery and any bundled service costs. Where a client considers a proposed price cap may create implementation risks or unintended consequences, those concerns should be supported by data wherever possible.

Customer-facing businesses should also consider whether their current bills clearly separate energy charges from other services, and whether they can identify which charges are regulated, exempt, bundled or otherwise outside the existing VDO-based electricity cap.

BEST PRACTICE: Do not wait until the final week to assemble evidence. Billing data, contracts and site-level information can take time to locate, especially where several entities are involved in the embedded network arrangements.

What should clients do before 2 July 2026?

For those clients who operate within embedded networks in Victoria, we recommend that you:

1. Confirm whether the site or service is an electricity embedded network, gas embedded network, bundled service arrangement or a combination of these.
2. Identify the legal basis for the activity, including licence, exemption or agency arrangements.
3. Review the current pricing model against the VDO cap, market offers and any gas or bundled service charges.
4. Collect recent bills and pricing data, including examples from different customer types if relevant.
5. Assess the commercial and compliance impact of a more competitive price cap or stronger enforceable pricing rule.
6. Prepare a submission before the consultation closes at 11:59 pm on Thursday 2 July 2026.

Likely next steps

After consultation closes, DEECA has indicated it will review survey responses, submissions and supporting information. It expects to publish a summary explaining what it heard and how feedback has informed next steps. Depending on the outcome, there may be further consultation on proposed changes.

The announced commencement date is 1 July 2027. That gives industry some time to prepare, but the policy settings may be shaped by the evidence provided now. For affected clients, the current consultation is the best opportunity to influence the design of the reforms before legislative or regulatory settings are settled.

Compliance Quarter comment

The consultation is a clear signal that Victoria is moving beyond the existing VDO-based electricity cap and towards more targeted price regulation for embedded network customers. The focus on gas and bundled services also suggests that future compliance obligations may extend into arrangements that have not always been treated as part of mainstream retail energy regulation.

Clients should approach this as both a regulatory risk and a submission opportunity. The strongest submissions are likely to be those that show how customers are currently charged, where existing protections work or do not work, and what design choices would produce fair customer outcomes without creating avoidable operational risk.

ACTION: Compliance Quarter can assist clients to assess exposure, prepare evidence, draft submissions and monitor the next stage of the Victorian embedded networks pricing reforms.

Source material

• Premier of Victoria, Lower Energy Prices For Embedded Networks, 27 May 2026
• DEECA, Victoria’s clean energy progress delivering savings for all, page last updated 5 June 2026
• Engage Victoria, Embedded Networks Review
• DEECA consultation paper, Reforming prices for customers in embedded networks, May 2026
• Essential Services Commission, Embedded networks
• Victorian legislation, Bills in Parliament