ENERGY REGULATOR ANNOUNCES NEW REVIEW ON EXEMPTIONS FRAMEWORK FOR EMBEDDED NETWORKS
December 21, 2023
Energy Regulator Announces New Review on Exemptions Framework For Embedded Networks
The AER have announced another review of the exemption’s framework of the legislation for embedded networks. The reviewing was initiated on the 30th of November 2023 and is expected to be finished early 2025.
We are seeing the strata industry shift towards the retail model which is far simpler and removes compliance and debt obligations from body corporate committees. The retail model is expected to be compliant with any potential future legislation change. It is likely that the announced review will accelerate this shift.
The objectives of the review as stated by the AERS are:
- Better understand potential harms and risks of residential embedded network customers
- Better understand the benefits of embedded networks and the extent that residential customers are receiving these benefits
- Determine whether any change or action is required regarding regulation, consumer protections, and future growth of residential embedded networks
The regulator in the past has published that the current exemption framework is no longer fit for purpose. The industry does expect there to be reasonable change in the legislation. However, at this stage it is too early to know exactly what changes will be made and when.
The table below shows the expected time frame and stages of this review.
Further information can be found on the website here: Review of the AER exemptions framework for embedded networks | Australian Energy Regulator (AER)
|Publish issues paper
|30 November 2023
|Stakeholder information session
|13 December 2023
|Submissions on the issues paper close
|Monday, 5 February 2024
|Draft network guideline and consultation
|Final network guideline
|Draft retail guideline and consultation
|Final retail guideline
*Dates are indicative and may change
Embedded Network Compliance Penalty for Exempt Seller
The Australian Energy Regulator recently published a compliance report detailing enforcement action taken against an exempt seller who admitted to overcharging their customers for energy.
This conduct was brought to the AER’s attention by a resident in the embedded network and occurred between December 2019 and January 2023, with approximately 110 consumers that were charged electricity tariffs higher than the standing offer price that would have been charged by the relevant local area retailer. The full statement and details are published online on the AER.
Read on for our top tips to ensure your embedded electricity network is not only compliant, but also providing the best value electricity costs possible to the body corporate and its residents.
This topic is very important in current times, especially given the recent energy market when some Body Corporate committees were required to enter into bulk contracts at high prices. And as you can see, there are serious repercussions for non-compliance with exempt seller guidelines, particularly for bodies corporate who are only able to recover the cost of supplying the service and to the maximum of the standing offer price that would be charged by the relevant local area retailer for new connections.
Here are our top tips to ensure your embedded electricity network is not only compliant, but also providing the best value electricity costs possible to the body corporate and its residents:
- Ensure the oncharging rates are less than the relevant standing offer price that would have been charged by the relevant local area retailer
- Seek advice from industry experts when renewing large market contracts, and making decisions regarding onselling tariffs
- Ensure your body corporate is not profiting from selling energy as this is a non-compliance with
- Consider alternative energy models that remove compliance obligations from the body corporate.
Article Contributed by Ben Humphreys, Managing Director, HumEnergy