AEMC Embedded Networks Consultation Paper

by Energy Action | Jun 17, 2015
The Australian Energy Market Commission, on May 21 2015 commenced consultation on a rule change request which aims to establish a regulatory framework for embedded electricity networks so that consumers within these networks are able to access to electricity retail market offers.

Embedded networks are private networks which serve multiple premises and are located within, and connected to, a distribution system in the National Electricity Market (NEM). Examples of embedded networks include shopping centres, retirement villages, caravan parks, apartment blocks and office buildings. Typically, tenants secure their electricity service through the owner of the network. According to a report prepared by Jacobs SKM, there are approximately 500 major embedded networks within the NEM and many thousands of smaller embedded networks.

Currently there is no specific reference in the National Electricity Rules (NER) to the management of embedded networks and the customers connected to those networks. Embedded network arrangements exist across all NEM jurisdictions, however, there is no consistent national framework regulating the access to retail competition for embedded network customers. While Victoria, New South Wales and South Australia have regulatory frameworks that support this, other jurisdictions, such as Queensland, ACT and Tasmania currently do not permit embedded network customers to seek competitive prices. Additionally, the detailed roles and responsibilities with respect to those customers differ across jurisdictions.

The rule change request proposes to require embedded network owners and operators to appoint an embedded network manager – a new type of accredited service provider under the National Electricity Rules – to be responsible for managing embedded network customers in the National Electricity Market.

The embedded network manager would be responsible for:

  • compliance with processes for transfer of customers between retailers;
  • setting up and maintaining data for the embedded network within the National Electricity Market systems; and
  • ensuring that data on life support customers within the embedded network is maintained and communicated to market participants.

If made, the rule would allow consumers within embedded networks to access retail market offers, similar to other consumers.

Legislative instruments and policy decisions that form the arrangements in each jurisdiction are provided below.

Jurisdiction Position in relation to retail competition in embedded networks
ACT Full retail contestability was introduced in the ACT with effect from 1 July 2003. Retail contestability for customers in an on-supply arrangement “appears” to be allowable (assuming consumption thresholds are met), however, the AEMO’s Metrology Procedures makes the position somewhat unclear.
South Australia Full retail contestability was introduced in South Australia with effect from January 2003. Retail contestability for customers in an on-supply arrangement is allowable
Queensland Full retail contestability was introduced in Queensland with effect from 1 July 2007. However, retail contestability for customers in an on-supply arrangement was excluded and provisions in the Electricity Act 1994 (the Act) reflect this position. Amendments to the Act, proposed as part of Queensland’s implementation of NECF, leave these restrictions in place.
Tasmania Full retail contestability was introduced in Tasmania with effect from 1 July 2014.While a policy position has been reflected in the MSATS noting retail contestability for customers in an embedded network is not allowed, there do not appear to be local instruments in place that support this position.
NSW Full retail contestability was introduced in NSW with effect from January 2002. Retail contestability for customers in an on-supply arrangement is allowable.
Victoria Full retail contestability was introduced in Victoria with effect from January 2002. Retail contestability for customers in an on-supply arrangement is allowable.

Source: Australian Energy Market Commission (AEMC) Consultation Paper, May 2015

The Consultation Paper seeks industry views on a number of issues, primarily relating to AEMO’s embedded network manager (ENM) proposal such as:

  • - Who should perform the ENM role?
  • - Should any party be prevented from becoming an ENM?
  • - When is an ENM required?
  • - Should all registrable and individual embedded networks be required to appoint an ENM requirements needed for the accreditation and governance of ENMs?
  • - Transition period/grandfathering conditions?
  • - Are retailers, NSPs, ENOs or other parties likely to seek to provide ENM services?

Leave a comment