Trystan Casey
Embedded electricity refers to privately owned and operated metering networks that supply electricity to multiple homes or businesses. These networks are commonly found in residential complexes, such as apartment buildings, retirement homes, and caravan parks, as well as commercial spaces like shopping centres. In an embedded network, the owner or operator of the site purchases electricity in bulk from an energy retailer and then sells it to the individual tenants or residents. This model allows for discounted electricity prices and creates an ongoing income stream for building owners and managers. While consumers in embedded networks may face challenges in choosing their electricity supplier, there are protections in place to ensure fair pricing and dispute resolution processes.
| Characteristics | Values |
|---|---|
| Definition | A privately owned and operated metering network that allows high-rise residential buildings to pool their electricity purchasing power and obtain discounted electricity prices. |
| Who is it for? | People living in apartment complexes, retirement homes, residential parks, or caravan parks. |
| Who supplies electricity? | A privately owned and managed supplier rather than a licensed retailer. |
| Who buys electricity? | The developer purchases all the electricity via one meter and then supplies it to all apartments via privately owned meters. |
| Who is billed? | Each apartment is billed for only the electricity they use. |
| Who needs to register? | The majority of people selling/supplying electricity through an embedded network need to be registered with the Essential Services Commission for an electricity licensing exception. |
| Who is an exempt seller? | The owner of a site with an embedded network who buys energy from an energy retailer and then 'onsells' the energy to the different consumers at the site. |
| Who is an authorised retailer? | An alternative authorised retailer can be contacted to see if they will consider taking over responsibility for your embedded network. |
| Who sets the prices? | The Essential Services Commission sets the maximum price for embedded networks as the Victorian Default Offer, which is reviewed annually. |
| Customer protections | The Energy Retail Code of Practice and the Electricity Distribution Code of Practice provide customers in embedded networks with protections similar to other Victorian electricity customers. |
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What You'll Learn
- Embedded electricity is supplied to multi-tenanted buildings or areas
- Embedded networks are privately owned and managed
- Exempt sellers do not need to be authorised by the AER
- Customers in embedded networks have similar protections to other electricity customers
- Embedded networks can provide an incremental revenue stream for developers
Embedded electricity is supplied to multi-tenanted buildings or areas
Embedded electricity is a system where electricity is supplied to a multi-tenanted building or area through a privately owned and managed supplier rather than a licensed retailer. This means that the building owner or operator buys electricity in bulk from an energy retailer and then sells it to the tenants or residents of the building.
Embedded electricity is commonly found in multi-tenanted buildings such as apartment complexes, retirement homes, shopping centres, and caravan parks. The electrical wiring in these buildings is configured to allow the owner to sell energy to all the tenants or residents. This type of network is known as an "embedded network".
In an embedded network, the owner of the building or site acts as an "exempt seller", as they do not need to be authorized by the Australian Energy Regulator (AER) to sell energy to their tenants. The exempt seller must comply with certain conditions, including providing customers with information about their rights and a copy of their exemption conditions.
Customers in embedded networks have similar protections to other electricity customers in Victoria. These protections include flexible payment options, clear time frames for receiving and paying bills, and the right to choose their own electricity retailer. However, customers in embedded networks may have difficulty buying energy from a seller other than the exempt seller due to the way the network is wired or because energy retailers may not want to sell to them.
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Embedded networks are privately owned and managed
Embedded electricity networks are privately owned and managed metering networks that serve multiple premises, such as apartment blocks, retirement homes, shopping centres, and caravan parks. The owner of the site with an embedded network runs the network infrastructure and purchases electricity in bulk through a single meter. This electricity is then supplied to all units or residents through privately owned meters, ensuring that each unit is billed only for their consumption.
Embedded networks are an alternative to traditional electricity supply, where each unit or resident would have an individual contract with a licensed retailer. In an embedded network, the site owner acts as the electricity supplier, buying energy from a retailer and on-selling it to occupants. This model allows for discounted electricity prices through bulk purchasing power.
While embedded networks are privately owned and managed, there are still protections in place for customers. The Energy Retail Code of Practice provides customers in embedded networks with similar protections to other electricity customers in the same region. For example, customers in embedded networks can contact their energy retailer if they anticipate difficulty paying their bills, and the retailer must offer assistance. Additionally, there is a maximum price that embedded networks can charge their customers, which is set annually and is often the same as the maximum price for households and businesses purchasing directly from energy retailers.
It is important to note that not all embedded networks are the same, and the specific arrangements can vary. Some embedded network operators are required to appoint an Embedded Network Manager (ENM) to help customers access energy offers from retailers and manage billing. Overall, while embedded networks offer benefits in terms of cost savings and centralised energy management, customers still retain certain rights and protections.
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Exempt sellers do not need to be authorised by the AER
Embedded electricity refers to electricity supplied to a multi-tenanted building or area through a privately owned and managed supplier, rather than a licensed retailer. In other words, it is when a person or business purchases energy from a retailer and sells it to their customers. Most people who sell energy in embedded networks are known as "exempt sellers" because they do not need to become authorised by the Australian Energy Regulator (AER) as energy retailers.
However, it is important to note that while exempt sellers do not need to be authorised by the AER, they still need to hold a valid exemption from the AER and follow certain rules that protect the rights of their customers. The AER's Retail Exempt Selling Guideline sets out the requirements and obligations for exempt sellers, including the need to provide customers with information about their rights and protections. For example, customers in embedded networks have the right to access adequate support if they experience payment difficulties due to hardship.
The AER governs who can sell energy without becoming an authorised retailer and the conditions exempt sellers must comply with. Exempt selling typically occurs when the seller's core business is not the sale of energy, the cost of obtaining authorisation outweighs the benefit to customers, or when an insignificant amount of energy is being sold. Examples of exempt sellers include retirement villages and caravan parks where the owner or manager buys electricity from an authorised retailer and then sells it to residents.
It is worth noting that customers in embedded networks may have the option to buy their electricity from either an authorised energy retailer or an exempt seller. However, they may encounter difficulties purchasing energy from a seller other than the exempt seller due to the way the network is wired or because energy retailers may be reluctant to sell to customers within an embedded network. To avoid paying twice for network charges, customers should ensure they receive an 'energy-only' offer from the energy retailer or that the site owner can arrange for the retailer to bill them directly for their network charges.
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Customers in embedded networks have similar protections to other electricity customers
Embedded electricity refers to privately owned and operated metering networks that supply electricity to multi-tenanted buildings or areas. In an embedded network, electricity is typically purchased in bulk by the owner or operator of the site and then sold to the individual occupants or tenants.
While customers in embedded networks may face certain limitations, such as a lack of choice in their electricity supplier, they still have similar protections to other electricity customers. In Victoria, the Essential Services Commission's Energy Retail Code of Practice provides customers in embedded networks with protections comparable to those of other Victorian electricity customers. This includes the implementation of the Victorian Default Offer, which sets a maximum price for electricity in embedded networks.
Additionally, the Electricity Distribution Code of Practice outlines specific protections that embedded network providers must comply with. These protections include the right to flexible payment options and assistance for those facing financial difficulties, clear time frames for billing, and reasonable disconnection procedures.
The Australian Energy Regulator (AER) also plays a role in protecting customers in embedded networks. While energy sold in embedded networks is often exempt from AER authorization, sellers must still hold a valid exemption and follow rules that protect consumer rights. Residential customers in embedded networks have specific protections, including eligibility for concessions and protections against excessive pricing.
It is important to note that customers in embedded networks may face challenges in exercising their rights and protections. Some have reported higher electricity bills and a lack of choice, highlighting the importance of ensuring that protections are effectively enforced and accessible to all customers.
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Embedded networks can provide an incremental revenue stream for developers
Embedded electricity refers to the delivery of electricity through an embedded network. This is where electricity is supplied to a multi-tenanted building or area through a privately owned and managed supplier rather than a licensed retailer. Embedded networks tend to buy electricity in bulk and then sell it to the customers or occupants of the building.
Secondly, embedded networks create a building-centric buying group that purchases energy at wholesale rates. This bulk-buying power allows the group to negotiate attractive rates from energy suppliers, which can then be passed on to tenants in the form of discounted electricity prices. By offering lower utility rates, developers can enhance the value proposition of their properties, making them more attractive to potential tenants or purchasers.
Additionally, the ongoing revenue generated from the sale of electricity within the embedded network can provide an incremental income stream for developers who build, retain, and manage the site. This revenue stream can help subsidize maintenance costs as the building ages, resulting in reduced ongoing owners' corporation fees for property purchasers. Furthermore, it can provide a marketing differential for developers, setting their properties apart from competitors.
Overall, embedded networks offer a convenient and cost-effective solution for developers, building owners, and consumers. By leveraging bulk purchasing power and centralized energy management, developers can generate incremental revenue, improve cash flow, and enhance the overall value of their properties.
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Frequently asked questions
An embedded electricity network is a privately owned metering network that allows high-rise residential buildings to pool their electricity purchasing power and access discounted electricity prices. The developer purchases all the electricity via one meter and then supplies it to all apartments via privately owned meters, so each apartment is billed for only the electricity they use.
Embedded electricity networks can benefit building owners, building managers, residents, and tenants. Property developers who build and sell can benefit from an embedded network as it can provide an ongoing income stream to the owners' corporation, resulting in lower building management fees for purchasers.
The Energy Retail Code of Practice protects customers in embedded networks, providing them with similar protections to other electricity customers in Victoria. There are also customer protections in the Electricity Distribution Code of Practice that embedded network providers must comply with. These include offering flexible payment options or referrals to government-funded assistance programs if a customer is experiencing financial difficulty.
