Insights

Embedded Network Manager

1 November 2017

In December of 2017, the Australian Energy Market Operator (AEMO) on conjunction with the Australian Energy Regulator (AER) will bring into effect a series of rule changes to the National Electricity Rules (NER) in support of the Power of Choice regulations that are designed to ensure that all electricity customer, either businesses or consumers, have access to the electricity retailer of their choice. We’ll talk more about the principles of the Power of Choice in our next post.

The most important part of the rule changes in relation to embedded networks is the creation of a new type of accredited service provider in our industry: The Embedded Network Manager or ENM.

The choice of title has led to some confusion in the industry as the service providers in the Embedded Network industry, companies like Energy On, have historically been referred to as Embedded Network Managers. Over the last year or so since the rule change was identified by AEMO, the description of companies like Energy On has evolved into a more specific description of our role and we are now known as Embedded Network Operators (ENO).

The role of the ENM is to facilitate access to retail competition for customers in embedded networks. Whilst the current Power of Choice regulations do require this in certain jurisdictions, the practical reality in many embedded networks has been that this is a quite difficult process.

Traditionally, the meters in an embedded network are invisible to the grid, with only the Parent (or Gate) meter being visible. This has made it difficult for other retailers to provide supply to individual meters inside embedded networks. What is often required is for the retailer of choice to replace the meter, generally at the customer’s expense, and supply energy only quotes and invoices, with the embedded network continuing to supply invoices for network charges.

This meant two bills and, with the meter replacement cost thrown in on top, very little potential for the customer to access the savings available from retail competition as the cost of exit would far outweigh the potential benefits. It was not uncommon for some ENO’s to take advantage of this fact and to price their rates at a non-competitive level. It was this disadvantage that led to the rule change.

So, what does this mean for your embedded network?

The default position of the AEMO is that Network exemption holders who own, operate or control an embedded network must either:

·         Become an accredited ENM; or

·         Appoint an accredited ENM.

Given the complexity and the cost involved in achieving accreditation, the sensible choice for most embedded networks will be to appoint an ENM to manage their regulatory compliance to the Power of Choice. Energy On has always supported the Power of Choice regulations in the embedded networks we operate and have always ensured that the customers in our networks were not disadvantaged in retail competitiveness and we will be an accredited ENM to ensure that all our networks are fully compliant.