More choices for embedded network customers

by Energy Action | Sep 16, 2015
On 10 September 2015, the Australian Energy Market Operator called for public comment on its draft determination to enable customers in embedded networks to choose their own electricity retailer.
Embedded networks are private electricity networks which serve multiple premises and are located within, and connected to, a distribution or transmission system in the National Electricity Market (NEM). Common examples of embedded networks include shopping centres, retirement villages, caravan parks, apartment blocks and office buildings. 

Within an embedded network, the embedded network operator (for example, a shopping centre owner) provides embedded network customers with network services. Currently embedded network operators also sell electricity to most embedded network customers.

The draft rule determination would allow embedded network customers to choose who they buy their electricity from, including from retailers. This will provide embedded network customers with the ability to choose the most appropriate electricity products and services while still remaining part of the embedded network.

Embedded network customers are likely to gain a number of benefits from access to the competitive retail market. Notably, access to retail market offers is likely to allow embedded network customers to:

  • - choose the price and price structure of their electricity service that suits them best, which may result in lower bills;
  • - choose from a wider variety of products and services; and
  • - gain easier access to government schemes and consumer protections.

Such access would not prevent embedded network operators from selling embedded network customers electricity. Instead, the Australian Energy Market Operator (AEMO) believes, it would provide them with greater incentives to compete with retailers.

The changes to the National Electricity Rules set out in the draft rule will create a new accredited provider role – embedded network manager – to perform the market interface functions that link embedded network customers to the NEM systems.  Changes to the National Electricity Rules (NER) will also trigger changes in the relevant AEMO procedures and the Australian Energy Regulator’s (AER) network exemption guideline. Together, these amendments will:

  • - set out the detailed functions, responsibilities, and governance arrangements for embedded network managers; and
  • - specify which embedded network operators are required to appoint an embedded network manager.

The draft rule specifies that the new version of the NER would start on 1 December 2017. The final rule will take effect in Victoria, NSW and South Australia on this date. Its application in Queensland, Tasmania and the ACT is dependent upon those governments making relevant legal changes to recognise the metering and other arrangements regarding embedded networks.

Embedded networks implementation schedule

Date

Action

17 December 2015

AEMC to publish final determination and rule

1 September 2016

AEMO to finalise systems and procedures changes

1 December 2016

AER to finalise ring fencing and network and reselling exemption guidelines

1 March 2017

AEMO to finalise embedded network manager services level (and accreditation) procedures

1 December 2017

 

Final rule commences, requiring specified embedded network operators to appoint an embedded network manager

Source: AEMC

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