IPART’s Final Report on Embedded Networks

New South Wales (NSW) embedded network customers and Embedded Network Operators should now be aware that IPART (Independent Pricing and Regulatory Tribunal) has released its final report on embedded networks.

IPART has published three final decisions based on the draft report, as well as an extensive series of final recommendations coming from the consultation process that have far reaching impact on the NSW embedded network market.

Key Decisions: IPART’s report focuses on maximum price protections for small customers in embedded networks.

1. Principles and objectives of assessing pricing approaches:some text
    
   • IPART has finalised its objectives in assessing how pricing should be set, with three additional objectives and the removal of one from the consultation paper.
 
2. Bench-marking maximum prices will protect embedded network customers.some text
    
   • Maximum prices for small customers in embedded networks will be bench-marked against what on-market customers are paying, based on the Energy Made Easy website.
 
3. Pricing Methodology will determine maximum unit prices, not annual bill caps.some text
    
   • Fair and transparent approaches to pricing ensures equity and better outcomes for customers.

Beyond these three final decisions, there are more than 30 final recommendations within the report ranging from how electricity and hot water should be billed, maximum price setting methodologies and how the regulatory framework would support these proposed changes.
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Pricing methodologies

Unlike the Default Market Offer (DMO) price cap approach, IPART indicates that their preference is to provide a simpler and easier to understand maximum unit price that customers can readily interpret and use to make decisions, and will be set to two decimal places.

The methodology used will involve assessment via the Energy Made Easy Website annually, and the approach taken will be under review at regular intervals to by IPART to ensure that it remains fit for purpose. What is proposed is a consumption charge equal to the median of the lowest consumption charges form active retailers

Under these price cap decisions and recommendations, particular attention should be given to the methodology being applied for flexible tariffs. Flexible tariffs, including time of use tariffs, will utilise the maximum average consumption tariff, and weighted to the AER’s daily usage profiles.

Industry Advocacy

ENM Solutions actively engaged with IPART throughout their consultation for this report, including the public forums and draft report. While there are elements within there commendations and decisions we support, which you can preview through our submission linked below, there are still significant aspects of this report that may not lead to be in the best interests of customers when in practice.

Embedded Networks within the National Electricity Market (NEM) are evolving in not just their service offerings, but also the role they play in our energy transition, their experience provided to customers and innovative solutions to housing and energy.

Overall, the report offers a substantial offering of change to how this market is currently regulated,supported, and managed. You can read through the final report via the link below, as well as the IPART notice published on the website for a quick summary of their position and reasoning for these findings.

ENM Solutions Submission

IPART Final Report

IPART Public Notice