EMBE DDE D NETWORKS
Implementing Victoria’s
EMBEDDED NET ORKS BAN by Lauren DeLorenzo, Journalist, Utility magazine
Although moving into a residential building with an embedded network offers convenience, it can also mean higher energy prices and less consumer protection. With more Victorians than ever living in embedded networks, the Victorian Government is implementing a ban on these networks in new residential apartment buildings to ensure competitive prices and fair access for residents.
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mbedded networks are privately owned and managed energy networks which run separately from the National Energy Market and provide services to multiple customers within one building, such as an apartment building or retirement village. These networks allow owners to buy electricity in bulk and resell the power to residents. This bulk buying should mean savings get passed on to residents, however a government review found that this is often not the case, and that there is a need to improve consumer protections for those living in these networks. The incremental ban aims to provide customers with lower energy prices, increased consumer protections and the option to choose their energy provider, with an exemption for buildings which use renewable energy microgrids to deliver low-cost renewable energy.
KEY CONCERNS An expert panel, assembled by the Victorian Government, called for feedback from stakeholder groups about the implementation of the ban. The panel received 133 submissions from embedded network customers, consumer representatives, embedded network providers, energy retailers, consultants and other invested parties. This included submissions from 88 individual consumers, seven consumer advocacy groups, 26 industry stakeholders and 12 others (local governments, research institutes and consultants). Based on evidence from submissions, the panel concluded that customers living in embedded networks may not have all the same consumer protections as on-market customers. This could include lower standards for disconnections and for life support arrangements, as well as varying access to dispute resolution services. The panel also concluded that these customers did not have the same access to rebates and concessions as onmarket customers, and that there was a lack of transparency around pricing due to bundled services (for example, bundling hot water and gas services).
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Other issues raised included: • A lack of choice for customers to access renewable energy sources • Barriers to access competitive retail offers, such as the cost to install a new meter • Difficulties accessing concessions Two virtual webinars were held in February 2021 to discuss feedback from stakeholders. Feedback from these groups found that among consumers, there was a high level of support for the ban.
LEADING UP TO THE BAN In 2017, the Victorian Department of Environment, Land, Water and Planning conducted a review of the state’s General Exemption Order (GEO), which determines the energy suppliers that require a license to operate. Embedded networks are exempt from this licence requirement, but a number of changes have since been put in place to support embedded network customers. These changes include providing access to free and independent dispute resolution services through the Energy and Water Ombudsman for some customers. Another change included setting the Victorian Default Offer (VDO) as the maximum price cap, allowing residents to access more equal energy prices. Although this change limited how much customers can be charged, the VDO does not apply to all customers in embedded networks. In October 2018, the Victorian Government announced its commitment to ban embedded networks in new residential apartment buildings entirely, to provide further customer protections. The government assembled a panel to lead a review of these networks and to develop recommendations on how to best implement the ban for new buildings. The panel is also developing recommendations on how to extend protections to customers in existing networks. The review asserted that energy is an essential service, and sought to ensure that any supplier of energy in a private network must obtain a Local Energy Service (LES) provider WWW.UTILITYMAGAZINE.COM.AU
