The AER has released a draft decision on the Review of the Exemptions Framework for Embedded Networks, along with proposed amendments to the Network Exemptions Guideline and Retail Exempt Selling Guideline and Family Violence Policy template for consultation.
The review, which began in November 2023, aimed to assess the potential harms and benefits experienced by customers in embedded networks and explore options for action under the guidelines. The AER has now considered key policy issues and stakeholder feedback which included the statement that the AER does not currently propose to restrict the development of residential embedded networks. The AER stated that there are currently insufficient grounds to warrant a restriction to the development of residential embedded networks.
The AER acknowledged the potential consumer benefits of embedded networks, including their ability to enhance the use of on-site energy storage and generation and support the integration of EV charging. However, the AER also identified systemic risks, such as:
- Regulatory Gaps –The current regulatory framework does not offer embedded network customers the same level of consumer protection as grid-connected retail customers. Key gaps include:
- The absence of a Retailer of Last Resort (RoLR) framework, leaving customers vulnerable if their provider fails.
- Limited life support protections, creating risks for vulnerable consumers.
- Limited Consumer Choice – While regulations exist to enable embedded network customers to switch to market retailers, practical barriers make this challenging. These include:
- High costs associated with switching.
- A complex and burdensome process.
- No obligation for authorised retailers to offer services to embedded network customers.
Despite these risks, the AER recognises that embedded networks can provide valuable sustainability and efficiency benefits, particularly in supporting their capacity to increase the utilisation of on-site storage and generation and to facilitate the integration of EV charging.
The table below is summary of key changes to the guidelines.
| Guideline | Proposed Change |
|---|---|
| Retail and Network | The introduction of a new condition, on exempt sellers to notify the AER, within 20 business days, of a change to any contact details for the exempt seller's authorised representatives, including their name, email address, and telephone number. |
| Retail and Network | Closure of the deemed exemption classes D1 and D2 and ND1 and ND2 from 31 December 2025. Corresponding changes would be made to NR1 and NR2 and R1 and R2 making that after the closure data, embedded networks that would have previously been deemed to be exempt will require registration. |
| Retail | A requirement (in condition 7) that prices (i.e., tariffs and so forth) for some (not all) exemption classes be published on an exempt seller's website or in the absence of a website in a location accessible to exempt customers (eg common area). |
| Retail | Various changes to the exemption conditions, including conditions 2, 7, 9, and 13 including a requirement to develop and offer a family violence policy. |
| Network | A new reporting and notification requirement which is to report on an annual basis on the number of residential customers |
| Network | Changes are proposed with respect to individual exemption applications, including that the AER may refuse an application that does not provide evidence that the proposed embedded network has met jurisdictional requirements. Also new requirements including:
|
| Network | Various other changes when compared to version 6 including changes with respect to applications for approval to retrofit an existing site. |
The AER is seeking stakeholder feedback on these proposed amendments, with submissions due by Monday, 28 April 2025. The final guidelines are expected to be published in Q3 2025.