Embedded Networks – Power of Choice Reform Facts and Fiction

Monday November 27th, 2017

This article is relevant to Body Corporates located in Queensland who operate within or manage an embedded electrical network, where electricity is purchased in bulk and then on-sold to individual unit occupants.

You may have already received a notice from your billing agent, strata manager or one of the newly accredited Embedded Network Manager Service providers. You may have seen different points of view on the pending changes to embedded networks under the “Power of Choice” reform.

In this article we separate the facts from fiction to help you understand these important changes. We have been working closely with industry regulatory experts Compliance Quarter and with the Australian Energy Regulator (AER) to get the right information to you. This article is not legal advice and we strongly suggest that you obtain individual advice on the regulatory obligations applicable to your individual circumstances.

The Embedded Network Manager

The Embedded Network Manager is a role that has been created to support customers in Embedded Networks transferring from ‘off-market’ to ‘on-market’ and vice versa: That is, embedded network customers switching between electricity supply from an exempt ‘on-seller’ to authorised retailers.

Embedded Networks themselves offer the possibility of providing cheaper energy and embedded generation. Nonetheless, the role of Embedded Network Manager is being established to reduce the barriers to customers within embedded networks who wish to switch to an authorised retailer- i.e. opt- out of the embedded network.

The Embedded Network Manager role is largely a technical one involving the management of transactions on the market system.

Fact 1 – The obligation to appoint an Embedded Network Manager does not apply in all States.

Application of Obligation in Queensland

The obligation to become or appoint an Embedded Network Manager in certain embedded networks does not apply in jurisdictions where customers in embedded networks are not afforded the right to a choice of retailer.

Queensland is, at the time of writing, a jurisdiction in which an Embedded Network Manager does not need to be appointed. Whilst a bill(the Electricity and Other Legislation (Batteries and Premium Feed-in Tariff) Amendment Bill 2017) was before parliament which would have given embedded network customers the right to a choice of retailer, this bill lapsed on 29 October 2017 and will need to be reintroduced by the new Government when formed.

Fact 2 – The obligation to become or appoint an Embedded Network Manager does not yet apply in Queensland and, if legislation is passed, it will only apply in South East Queensland.

Transitional Compliance Period

The AER understands that there is a limited number of Accredited Embedded Network Managers, most of which are located in and service Victoria. Consequently, the AER has announced a transitional period for compliance with this requirement, their publication on this matter can be read here.

In order for embedded network operators (in those jurisdictions that require an Embedded Network Manager to be appointed) to adjust to the new requirement to become or to appoint an Embedded Network Manager, the AER is allowing a transitional period from 1 December 2017 to 31 March 2018. Through that transitional period, if an embedded network operator can demonstrate they are taking active steps to appoint or become an ENM, the AER will “focus on education and not actively pursue enforcement of compliance issues in respect to the NER [National Electricity Rule] requirement.”

Fact 3 – Even where you do need to appoint an Embedded Network Manager, you will have additional time to do so providing you take active steps towards appointment.

Do I require an Embedded Network Manager?

The AER has developed an interactive tool to assist you in determining if you need to become or to appoint an Embedded Network Manager, which you can access here.

It is also worth noting that in certain circumstances a poll can be conducted to appoint or not appoint an Embedded Network Manager. The situations in which a poll may be used and the requirements of the poll are explained in the AER’s Network Exemption Guideline.

Fact 4 – An Embedded Network Manager is not required in all cases.

Summary

Embedded Networks are set to see additional regulatory obligations including those relating to the appointment of an Embedded Network Manager. Nonetheless, it is always important to get the correct information on changes, from the source.

If you are being pressured to make a decision on the basis of “looming deadlines and fines,” particular in the instances where you are being asked to sign up for services you may not require, we strongly suggest you contact the AER direct to assist you with your decision making. The AER contact details can be found on their website here.

This article was contributed by Adam Ford of ARC Utilities Management.