New Framework for Embedded Networks (Bulk Electricity)

June 25, 2020

If your Body Corporate purchases electricity in bulk and on-sells to the resident or is considering doing so, then this information applies to you. The Australian Energy Market Commission (AEMC) who is the authority that makes and amends rules for the National Electricity Market has finalised the upcoming rule changes for embedded networks. The new requirements for authorisation and registration are the most significant changes for bodies corporate in their roles as embedded network operators (ENOs) and exempt sellers which allows them to on-sell to residents. Under the updated framework, two new roles will be created that effectively replace ENOs and exempt sellers. These are – Embedded Network Service Providers (ENSPs) and off-market retailers.

ENSPs will be required to register with the Australian Energy Market Operator (AEMO). An ENSP will be defined to mean ‘a person who owns, operates or controls an embedded network and who is a Registered participant within the meaning of the NEL in respect of that embedded network’. Most Committees do not need to worry about the ENSP role – we explain why later.

Off-Market Retailers will be required to obtain an authorisation from the Australian Energy Regulator (AER), and will be subject to most requirements that existing authorised retailers are subject to.

On the new roles, the AEMC cited the current arrangement you have with your current Utilities Manager or ARC Utilities Management:

“It is likely that small entities, such as a single owners’ corporation, will find it costly to become registered and authorised and to comply with the proposed framework. The Commission anticipates that the developers and owners of embedded networks will instead appoint a third party service provider that has the necessary registration and authorisation. This is similar to what already happens now in many smaller embedded networks where many activities are performed by third party billing agents and other service providers”.

Effectively, the AEMC are saying that unless bodies corporate with embedded networks want to jump through the hoops and become authorised themselves, they will need to appoint a provider like ARC Utilities Management to manage their energy supply. This is why ARC Utilities Management is in the process of obtaining a retailer authorisation estimated to be granted by the AER later this year – to ensure we can continue to provide utility services to customers under the new framework.

What about existing metering infrastructure?

All embedded networks must appoint an off-market retailer, no matter when they were established. However, there are special arrangements in place for those networks established prior to 1 December 2017 (legacy networks). Legacy networks will:

  1. Continue to operate under network exemptions. This means there is no need to appoint an ENSP (however they will still require an accredited Embedded Network Manager (ENM) like ARC Utilities Management).
  2. Be exempt from the metering provisions in Chapter 7 of the National Electricity Rules, meaning there will be no metering infrastructure changes required due to the new rules.

Any network established after 1 December 2017 will be required to appoint an ENSP and the off-market retailer for those networks will need to comply with the Chapter 7 metering rules. This may include their off-market retailer requiring an upgrade to their meters.

If you have queries in relation to changes that could affect you, please either add to the comments below or get in touch direct.

This article was contributed by Adam Ford, Partner – ARC Utilities Management

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