September 18, 2026
Currently, the Australian Energy Regulator’s Network Exemptions Guideline version 7 and Retail Exempt Selling Guideline version 7 are the most broadly applicable references for many embedded network compliance requirements. These Version 7 iterations introduced several requirements that commenced during 2026, including registration of most new residential and small-business networks, family violence protections, selected tariff-publication obligations, ombudsman information on some bills and residential-customer reporting.
With this in mind and a Version 8 not far on the horizon, this article explores some of the more common questions we’re seeing regarding embedded network compliance.
Anyone owning, controlling or operating an electricity distribution network in the National Electricity Market must either register with the Australian Energy Market Operator (AEMO) as a network service provider or hold an Australian Energy Regulator network exemption. When selling energy to a third party, a separate retail authorisation or applicable retail exemption is required. Since 1 January 2026, most newly established small residential and small-business embedded networks that previously could have relied on deemed classes must instead register under the relevant registrable class. Whether you require an exemption or a license/authorisation will depend on your specific situation, but you will undoubtedly need one or the other.
If your main business is selling or supplying energy, then it is likely you require a license. If you are selling or supplying energy incidentally in addition to some other arrangement or situation, then an exemption may be more appropriate. However, the type of exemption you require will change depending on the type of activity and customer. Practically speaking, this means that you need an exemption that is specific to whether for example you are selling or supplying to residential or commercial customers. Once you can determine the type of customers you have, we can help you align to the right exemption, and then also help you understanding the obligations that accompany that exemption. Each exemption activity class or customer type will carry different obligations that you need to comply with.
Lastly, it’s important to know that if you are a network owner, simply appointing another party to bill or invoice the energy for your customers does not shift the compliance obligation off you. It’s likely you are still the one responsible for any compliance breach that occurs. This is particularly important for those in Victoria, where additional exemption registrations are required beyond just the AER’s public register.
- How many customers am I selling/supplying energy to?
- What type of customers do I have?
- How much energy are my customers using?
Importantly, there is no single embedded-network tariff or practice across the entire National Electricity Market (NEM). While the most common question hidden in here is about the price being above the lawful maximum, which again depends on the seller type, exemption class, customer type and jurisdiction, there are also a raft of billing and invoicing requirements under the AER’s Retail Exempt Selling Guideline and ESC’s Energy Retail Code of Practice.
While you should be aware of what price cap applies to customers in your region, you should also be looking at things like ombudsman details, complaint contacts, metering details, start and end reads and usage values. Not only that, but before you even started billing customers – have you provided them all the information they are required to be given? Have you obtained explicit informed consent? Invoicing of energy to embedded network customers extends far beyond just the price you’re setting.
- Does my pricing fall in line with the relevant standing or default offer in my region?
- What information am I providing to customers prior to them signing up with me for the sale of energy?
- What information am I including on my invoices to my customers?
- Am I a member of the relevant ombudsman scheme in my state?
Broadly speaking, the answer is yes. Most locations within the National Electricity Market provide for regulated access to choose another retailer. However, there are limited scenarios where this isn’t the case. Where retail competition is available, an embedded network customer may seek an offer from an authorised retailer, although the retailer is generally not obliged to make an offer. Customers will in most cases need to seek what’s called an “Energy only” offer from this retailer, with network costs recovered by the exempt embedded network service provider (EENSP). This process of choosing another retailer from within an embedded network is known colloquially as ‘going on-market’ and is facilitated by an Embedded Network Manager (ENM).
When you need to appoint an ENM will vary. Some embedded networks are deemed to require early appointment, usually those 30 or more residential or commercial customers. However, if you have less then this and a customer chooses to go on-market, you will then need to appoint an ENM to facilitate this process. Under version 7 of the Network Guideline, an Embedded Network Manager must generally be appointed within 30 business days after an applicable trigger event such as a customer going on-market. The ENM role is a specialised and AEMO Accredited role in the market, while many hold this accreditation and can provide this service, very few are aware of the full requirements of their ENM and your obligations. Using the services of a specialist and recognised expert such as ENM Solutions will ensure you have an independent support for your embedded network, monitoring your required obligations and compliance.
- How many customers do I have?
- What type of customers do I supply energy to?
- Do I already have an ENM service through another provider?
- Have they appointed themselves to my embedded network in the market?
- Is there an ENM explicitly listed on the invoices being sent to my customers?
With the AER’s exempt framework and that of other states evolving rapidly with multiple iterations over recent years, there has been a significant increase in the applicable protections for embedded network customers. These include advances in payment assistance, hardship arrangements, restrictions on disconnection, life-support processes, complaint handling, ombudsman access, family violence safeguards, explicit rebate and concession assistance, account-credit refunds and continuity-of-supply measures.
From 1 January 2026, the AER introduced family violence obligations for new applicable exempt sellers, while existing sellers subject to the condition were required to have their policy in place by 1 July 2026.
With such rapid change, it’s crucial that those managing supply and sale at your embedded network have frontline staff that know how to recognise hardship, family violence and life-support notifications, while maintaining confidentiality and prompt escalation. If any of these protections don’t seem familiar or part of your regular business as usual with customers, there’s a good chance you may need to revisit your compliance position.
- Have you implemented a family violence policy?
- How are you ensuring confidentiality requirements are met?
- Have you implemented a hardship policy?
- Are you offering explicit support around rebate and concession information and financial support?
- Is there a formal disconnection process and procedure in place?
Compliance now requires more than just holding the right exemption. Recent updates now require exempt parties to keep theirs and any authorised-representative details current, notifying the AER of any changes to ownership or contact details. This also includes maintaining relevant life-support and metering evidence and complying with new reporting requirements for residential network-exemption holders, reporting updated customer numbers during July each year from 2026.
Importantly, the responsible or primary exemption or licence holder remains accountable for applicable conditions even where metering, billing, customer service or network operations are outsourced. A common misconception is that since you appoint an Embedded network Operator to manage your billing, they take on all compliance obligations. Therefore, it’s important for EENSPs and in particular primary exemption holders to ensure access to practical evidence of exemption registrations, contracts, meter registers, customer classifications, tariff approvals, complaints, life-support records, incident logs, annual returns and operator assurance reports.
- When was the last time you updated contact details on your AER Exemption?
- Are the Exemption details on the public register still up to date?
- How is your EENSP managing your compliance obligations?
- Do you have an authorised representative listed on the exemption?
- Have you been completing the required AER customer reporting?
While the above provide a broad sweeping commentary on compliance obligations across the NEM, it’s important to also know that most state’s now carry some form of specific requirement that differs from other states. Understanding your compliance in that context is becoming more and more difficult, and as a result more important to know how you can show you’re meeting those competition obligations. Comparatively, many providers would previously assume you are compliant just because you old the right or even ‘a’ exemption, rather than the right one. However, you will note that these commons questions are connected in many ways. While you might think you’re compliant because you use the services of an operator who specialises in produces bills, it’s possible the wrong legal entity holds the exemption, or tariffs are not properly supported, retailer access is obstructed, vulnerable-customer processes are incomplete, or the primary exemption holder cannot produce the records needed to prove compliance.
For this reason, ENM Solutions provides our own independent services as an AEMO Accredited Embedded Network Manager. With a team of experts, we can fulfill any obligations relating to the ENM role while also providing much needed support for your embedded network as an independent party to your customers and to you for your exemption compliance. Don’t rely on the word of providers looking to win other parts of your business with no stake in the compliance outcome. Work with an established and experienced team who you can trust to tell you when things are going well, and when there’s work to do.
If any of these questions hit home for you or perhaps leave you with more, reach out to us and let’s have a conversation that will help alleviate some of those concerns and provide you with a clear path forward.
