In this webinar, lawyer and regulatory energy expert Alex Silcock provides a review of regulatory arrangements for embedded networks titled “The Keys to Regulations for Embedded Networks” including key takeaways for Embedded Network Operators, Exempt Sellers and On-Market and Off-Market Retailers. The Keys to Regulations for Embedded Networks

The Compliance Quarter team is dedicated to providing excellent service to our clients across the energy sector and this includes insight into current and potential future regulation within the industry. If you have any questions about embedded networks or the sector in general, please do not hesitate to contact us.

Below you can view a video of the webinar along with the presentation slides and a full transcript.

Background and Current Regulatory Framework

  • Definition of Embedded Network
  • Consumer Protection
  • Benefits of Embedded Networks
  • The Power of Choice

Timeline of Regulatory Change

  • November 2012 – Power of Choice Review.
  • November 2017 – Final Report on Review of Regulatory Arrangements in Embedded Networks.
  • 2019-2020 – Recommendations from the Final Report implemented
  • December 2015 – Changes to the National Electricity Rules to implement the Power of choice.
  • December 2017 – Final Power of Choice Rules come into effect.

Elevation of Embedded Networks into the National Framework

Owning, controlling or operating a distribution system (NEL)

  • Register with AEMO as a network service provider
  • Exemption from registration as network service provider.

Selling energy (NERL)

  • Authorisation as a retailer from AER.
  • Exemption from authorisation as a retailer.

Owning, controlling or operating a distribution system (NEL)

  • Register with AEMO as a network service provider.
  • Registration with AEMO as a registered embedded network service provider.
  • Exemption from registration as network service provider – limited circumstance.

Selling energy (NERL)

  • Authorisation as a retailer from AER
  • Authorisation as an on-selling retailer from AER – additional flexibility.
  • Exemption from authorisation as a retailer – limited circumstances.

AEMC Review of regulatory arrangements for emebedded networks 2017

Changes for Sellers in new Embedded Networks

‘Any party who sells energy to a consumer in an embedded network to hold a retailer authorisation from the AER or be exempted by the AER from holding a retailer authorisation according to a narrow set of circumstances’.

Heightened consumer protection requirements and compliance obligations.

Metering responsibilities and compulsory Embedded Network Manager appointments.

Provision of information on costs, benefits and risks to Embedded Network customers prior to entry into retail contracts.

Changes for Network Operators in new Embedded Networks

‘the registration of embedded network service providers with AEMO should be required unless exempted by the AER according to a narrow set of circumstances’.

Heightened obligations focused on consumer protection.

Obligations to be under the Retail Rules and Retail Law.

Guaranteed Service Level Schemes.

Impact on current Authorised Retailers only engaged in on-selling.

Increased Regulatory Certainty

  • Authorised retailers are already well prepared
  • ‘Designated Retailer’ concept and the tripartite relationship
  • Risk of duel obligations.

Effect on Legacy Embedded Networks

AER Enforcement and ease of switching on-market.

Where there is an ENM appointment, child embedded network customer connections must be issued with National Metering Identifiers (NMIs), so they are discoverable by retailers.

AER to have specified role codified in legislation to monitor embedded network service provider and exempt selling behaviour.

Enforcement options for network exemption breaches, to be more closely aligned with powers for retail exemption breaches.

ENSP to charge the retailer no more than the equivalent external network charge that would have been charged by the LNSP if the customer had been directly connected to the LNSP’s network.

Going on Market and Network Charges

Keys to Regulation for Embedded Networks - Option 1

Keys to Regulation for Embedded Networks - Option 2

AEMC Review of regulatory arrangements for embedded networks 2017

The Keys to Regulation for Embedded Networks Presentation Slides

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