In November 2023, the AER commenced its Review of the AER exemptions framework for embedded networks. The objectives of this review are to:
- Better understand the harms, or risk of harms, residential embedded network customers may be facing.
- Better understand the benefits of residential embedded networks, and the extent to which customers are receiving them.
- Determine whether we should make changes to our Network Exemptions Guideline and Retail Exempt Selling Guideline (the guidelines), to address any issues we identified. For example, by strengthening regulatory oversight of embedded networks, enhancing reporting arrangements and consumer protections, or restricting the growth of future residential embedded networks.
Issues paper
On 30 November 2023, the AER published an issues paper seeking stakeholder feedback on the benefits and harms due to embedded networks, and possible policy approaches. We received 37 submissions. As part of the consultation process, we also held an online public forum on 13 December 2023 to present on and discuss topics from the issues paper. About 100 guests attended.
Draft decision
On 17 March 2025 the AER released the Review draft decision for public consultation, alongside draft guidelines (both version 7).
The Notice of Draft Decision sets out the information we received, how we have considered stakeholders’ feedback, and the proposed actions we have taken to amend the guidelines to strengthen protections for consumers and increase the AER’s visibility of embedded networks. It also sets out our reasoning for the proposed guideline amendments.
Stakeholders are invited to provide submissions on the draft guidelines by COB, Monday, 28 April 2025.
Bastion Insights supported the AER by conducting qualitative and quantitative research into embedded network customer experiences. Bastion Insights’ final report, Review of the Exemptions Framework for Embedded Networks Research Report, has been published alongside the draft decision.
Additionally, family violence specialists Safe and Equal supported us by providing expert advice on implementing family violence protections for exempt customers. Its report Policy Advice on Family Violence Obligations for Exempt Sellers, Final Report, July 2024, has also been published alongside the draft decision.
Background
Embedded networks are private electricity networks that can serve multiple customers. In most cases, the embedded network operator buys energy from an energy retailer and on-sells it to the occupants of the site. Residential embedded networks include retirement villages, caravan parks and large apartment complexes.
The AER regulates who can operate embedded networks and on-sell energy within them. We do this through a framework that exempts entities, who sell or supply energy within embedded networks, from aspects of the standard energy framework. We govern this exemptions framework through our Network Exemptions Guideline (the Network Guideline) and Retail Exempt Selling Guideline (the Retail Guideline).
Considerable growth in embedded networks, coupled with concern about customers facing worse price and consumer welfare outcomes has led to several jurisdictional reviews and inquiries. These have identified a range of potential harms for embedded network customers. These include barriers to accessing retail competition, placing embedded network customers at risk of monopolistic pricing, and limited ability for the AER to monitor compliance or take enforcement action. The inquiries also noted potential benefits, including lower energy prices.
Given the issues identified through the various inquiries, and the changes that are driving the growth in embedded networks, it is timely for us to examine whether the current arrangements are working in the long-term interest of consumers, and if not, what regulatory change is warranted.