The future of embedded networks in New South Wales
The NSW Government has released both a Ministerial Statement of Expectations and terms of reference for a review into the future of embedded networks for consultation, in an attempt to progress reforms to embedded networks to benefit customers in NSW.
The NSW Embedded Network Action Plan
The NSW Minister for Energy, The Hon. Matt Kean MP, has released the Ministerial Statement of Expectations: Protecting NSW customers of embedded networks, for consultation as part of the NSW Government’s Embedded Network Action Plan (the Plan).[1]
The Plan is a suite of reforms aimed at aligning consumer protections and pricing outcomes within embedded networks in NSW with those of standard supply customers (i.e., customers that are not in embedded networks).
The NSW Government also intends to advocate for increased consumer protections, improved competition and an enhanced national process for retailer licensing and exemptions at the national level through its Plan.
Submissions on the Ministerial Statement of Expectations close on 31 March 2023.
The IPART review
The Independent Pricing and Regulatory Tribunal (IPART) has been tasked with undertaking a review into the future of embedded networks in NSW to assist the NSW Government in achieving some of the actions identified under the Plan.[2]
The review’s draft Terms of Reference require IPART to investigate:
Setting prices for hot and chilled water, and whether new embedded networks for hot and chilled water should be prohibited in NSW;
Setting gas prices in embedded networks;
Whether the Default Market Offer is appropriate for embedded networks, or if a different metric (potentially lower than the Default Market Offer) should be used to set maximum electricity prices in embedded networks; and
What the compliance and enforcement framework would need to look like under any new price protection rules.
Customers in embedded networks range from tenants in shopping centres, to some of the most vulnerable energy customers – such as residents in caravan parks. This means that a one-size-fits-all approach is unlikely to be suitable.
IPART has also been instructed to take account of the NEO in making its recommendations. The timing of this review is highly likely to mean that IPART will need to consider the newest arm of the NEO, being the emissions reduction objective, which is in the process of going through the South Australian Parliament.
It will be interesting to see how an economically focussed regulator, such as IPART, prioritises emissions reductions in relation to the existing NEO objectives.
Submissions on the draft Terms of Reference close on 14 April 2023, to be followed by a draft report that will be released for consultation later this year. IPART is obliged to finalise its recommendations within 9 months of setting the final Terms of Reference.
How Can Rennie Help?
Will you be impacted by these changes? Do you need to understand how the new emissions objective will affect IPART’s decision-making and what this will mean for your business?
Rennie has a highly experienced team of energy market regulation experts with a deep understanding of embedded network regulation. We have also been following the development of the NEO closely, recently releasing an insights article on this topic (click here to read).
Rennie can assist you in writing your submission and we can provide your business with advice on the implications of proposed (and final) changes that result from this consultation process. Rennie can also analyse your business strategy in dealing with these changes or, more generally, in your transition to net-zero.
Contact us to find out more.
[1] https://www.energy.nsw.gov.au/sites/default/files/2023-02/NSW_Embedded_Network_Action_Plan.pdf
[2] https://www.ipart.nsw.gov.au/sites/default/files/cm9_documents/Draft-Terms-of-Reference-The-future-of-embedded-networks-in-NSW-1-March-2023.PDF