Embedded networks—changes to the network and retail exemption guidelines
By Kristy Dorney and Sarah Salesse
If you own or manage a property operating an ‘embedded network’, you should be aware a new Retail Exempt Selling Guideline (Version 6) (Retail Exemption Guideline) was published last July. Also, version 7 of the Network Exemption Guideline (Version 7) (Network Exemption Guideline) was published in draft in October 2022 for public consultation with a view to implementation in 2023.
In this article, we discuss the most significant changes to the Retail Exemption Guideline and the proposed Network Exemption Guideline, and what that means for embedded network owners and operators.
What is an embedded network?
Embedded networks are privately owned electricity networks situated within private land. The network receives electricity from the main electricity network and distributes it to consumers within the private property. These can be found in everything from residential apartment buildings to commercial shopping centres.
Retail Exemption Guidelines—what has changed?
Version 6 of the Retail Guideline was released in July 2022 following a one-month public consultation. A summary of some of the key changes are as follows:
|Exemption holder||A new requirement has been introduced requiring changes in ownership of sites containing an embedded network to be notified to the Australian Energy Regulator (AER) within 20 business days from the date the change in ownership took place.
In addition, where an exempt seller holds an individual exemption and sells the site to a new owner, the new owner needs to submit a new application for an individual exemption to the AER for consideration.
|Timing of exemption registration||The new guideline clarifies the position that registrable exemptions come into effect only once the exemption is published on the AER’s website, and not when the online form is submitted to the AER.|
|Hardship policy||A new condition has been introduced which requires exempt sellers selling to residential exempt customers to—
It also identifies types of unreasonable conditions that cannot be included in a hardship policy
|Factsheet||A new requirement has been introduced to the information provision statement condition which requires exempt sellers to provide residential customers with a prescribed factsheet explaining how the customer can access an authorised retailer of their choice if they live in an embedded network.|
|Retrofit to convert to embedded network||To retrofit a site to convert it to an embedded network, the network owner or operator must already apply for an individual exemption or obtain informed consent from every affected tenant or resident. The new guideline standardises the information required to be disclosed to secure that informed consent. In addition, obligations on consent gathering and record keeping have been tightened and extended to all owners and operators undertaking a retrofit.
Retrofitting a site with a new embedded network is generally subject to an additional layer of compliance and advice should always be sought prior to proceeding.
|Ombudsman scheme membership||The new guideline introduces a requirement to the individual exemption application process to provide evidence of steps taken to obtain ombudsman scheme membership. Exempt sellers with less than 2,000 customers are automatically deemed a participant of the Energy and Water Ombudsman Queensland scheme. However, an exempt seller with more than 2,000 customers must pay a membership fee to join the scheme.|
Draft Network Exemption Guideline—what changes are proposed?
Version 7 of the Network Exemption Guidelines was published in draft in October last year for public consultation. A summary of the key proposed changes is outlined below.
|Primary registrant||Currently, the Network Exemption Guideline requires all persons associated with the network to register an exemption with the AER. This may include custodians, trustees, responsible entities, agents, and embedded network service providers. This obligation remains. However, the draft guideline proposes one ‘primary registrant’ can be nominated to perform certain obligations on behalf of the other parties. At this stage, the only condition proposed for the primary registrant to do on behalf of other parties is to be a member of the ombudsman scheme.|
|Embedded Network Manager deadline for appointment||The draft guideline proposes the appointment of an Embedded Network Manager be nominated within 30 business days of a customer exercising their right to access a retailer of their choice outside the embedded network. Currently, no timeframe is specified.|
|Explicit informed consent||The draft guideline proposes an update to the explicit informed consent requirements where a site is proposing to retrofit an embedded network conversion (which will mirror the obligations in the Retail Guideline).|
|Stronger protections against disconnections||The draft guideline proposes stronger protections against disconnections for on-market residential customers living in an embedded network buying electricity from an authorised retailer.|
Submissions closed in December 2022 and can be accessed here. We will provide a further update once the final guideline is released.
We can help!
The supply and sale of electricity is highly regulated. If you currently have an embedded network or have plans to retrofit an existing building with an embedded network, ensure you understand your obligations under the Retail and Network Exemption Guidelines or seek early advice.
For assistance in reviewing the guidelines and ensuring compliance with the National Energy Retail Law, National Electricity Law or Network and Retail Exemption Guidelines, get in touch with partner Kristy Dorney, or a member of our team.
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