June 18, 2026
The embedded network regulatory landscape continues to evolve rapidly across the National Electricity Market (NEM). Over the last 12months, we have seen a series of reviews, draft reforms and change implemented from the Australian Energy Regulator (AER), Essential Services Commission (ESC), and New South Wales (NSW) Independent Pricing and Regulatory Tribunal (IPART), with a clear trend towards increased regulation and a ‘burden of proof’ upon embedded networks to show value.
While each jurisdiction is progressing different components of reform, a clear pattern is emerging. Regulators are tightening expectations on pricing outcomes and consumer protections, while also adapting frameworks to accommodate new market models such as flexible trading.
This update outlines some of the key aspects across more recent reforms and what they mean for stakeholders within the embedded network industry.
The AER released an Exemption Guidelines Review proposing changes to both the retail and network guidelines, followed by a new Draft Retail Exempt Selling Guideline. Primarily, these focused on adapting the guidelines to the new flexible trading rules and exploring a major change to the retrofits process.
- New rules allow energy usage to be separated via “secondary settlement points” without requiring embedded networks. Read more via our article HERE.
- Clarification on where scenarios do not trigger network exemption requirements.
- Removal of some individual exemption approval requirements.
- Introduction of self certification and registration processes for commercial retrofit network exemptions.
- Consideration of standardised consent and marketing materials to support compliance in retrofit and exemption processes.
- Proposed removal of individual exemption requirements for some retrofit arrangements.
- Development of a new registrable exemption class for commercial retrofits.
Flexible trading will provide a parallel pathway to the use of embedded networks in certain energy solutions, particularly for large customers utilising secondary settlement points. Meanwhile, the AER is reducing the barriers for commercial retrofit projects, signalling support for continued development and growing demand for innovative C&I energy solutions that Embedded Networks can facilitate. The result is a shift in Compliance burden from approval-based regulation to certification-based oversight in these projects.
The AER’s broader Retail Guidelines review has relevance for those selling as retailers into embedded networks, while further consideration was also given to what information could be useful for customers in Embedded Networks to understand their energy plans better. Four of the AER’s guidelines are tabled as being combined, purported to be in the interests of making it easier for retailers to comply with increased information provision requirements and consumer protections.
Stronger communication requirements
- Mandatory use of plain language and design principles in customer communications
Improved price transparency
- Enhanced requirements for plan information, pricing clarity, and bill presentation
“Deemed better offer” framework
- Retailers must identify whether a customer has access to a cheaper plan based on usage
- Hardship customers must receive a financial benefit equivalent to that better offer
Integration of new market features
- New definitions and communication requirements for secondary settlement points and flexible plans
- Regulatory expectations are increasingly aligning with full retail market obligations, with gaps closing that previously did not capture retailers selling into embedded networks.
- Customer communications and transparency are forming part of the compliance functions, not simply service and administrative tasks.
- Embedded network operators offering more complex services (for example, electric vehicle charging or demand response) will face heightened disclosure requirements.
The Victorian Government has extended on its 2021 consultation into embedded networks, this time revisiting the current approach to pricing for customers in Embedded Networks. This follows a major shift evidenced in NSW, and a potential deviation from the existing VDO approach. Those previously following the original consultation may need to re-register to follow this dialogue, which you can access via the Engage page, here: https://engage.vic.gov.au/embedded-networks-review
Embedded network customers may not be receiving cost savings
The ESC has focused on pockets of information from other reviews to suggest customers are potentially not ‘enough’ better off than standard retail customers to justify a reduced power of choice.
Limitations of existing price caps
The ESC identifies that the Victorian Default Offer (VDO) acts as a maximum price for exempt sellers in embedded networks but does not protect embedded network customers being sold energy from licensed retailers.
Potential expansion of price regulation
There is consideration of stronger or alternative price caps aligned to market offers, likely similar to those proposed and being implemented within NSW.
Gaps in bundled service regulation
Services such as hot water or centralised cooling are not subject to the same protections as electricity or gas and are a future area of consideration for the ESC’s regulatory program. Noting that a separate piece of work has already commenced pertaining to embedded networks and Gas in Victoria.
Victoria's Policy focus appears to be justifying changes in it's current regulatory approach, in line with an existing market structure, to a burden of justifying greater outcomes for customers than those in the wider market. Further price regulation may move beyond static caps to market-aligned pricing benchmarks set by the ESC, with bundled and supplementary services representing a future are of consideration for the ESC.
During 2023, the NSW Government initiated their Embedded Network Action Plan with a focus on improving consumer and price protections for embedded network customers. Since then, the Independent Pricing and Regulatory Tribunal (IPART) has completed Industry and consumer consultations, releasing a final report to which the NSW Government has responded and acted on. Prior to these most recent changes, some stakeholders may not be aware of the separate requirements implemented in 2025 pertaining to Land-Lease communities.
- Introduction of maximum electricity price caps for land lease communities under legislation.
- Prices must be less than or equal to the median retail market offer in the local distribution area.
- IPART is responsible for determining and publishing these maximum prices annually.
- New pricing framework replaced earlier methodologies, including previous billing approaches.
- Maximum price determinations apply from September 2025 with ongoing annual updates required.
- IPART recommended methodologies for setting maximum prices across electricity, gas, hot water and centralised systems.
- Establishment of price caps aligned with market offers, to be set by IPART.
- Introduction of mandatory membership of the Energy and Water Ombudsman NSW (EWON) for embedded network sellers.
- Requirement for operators to publish pricing, services and site details on their websites.
- Development of a billing standard and pricing methodology, to be consulted on and implemented following Ministerial approval.
- Expansion of consumer protections, including access to dispute resolution, rebates and limits on long-term contracts.
NSW continues to shift away from a consistent national framework for embedded networks, requiring operators to better understand jurisdictional differences. IPART’s role in this market is expanding beyond review into active price setting, compliance and enforcement oversight. Embedded Network feasibility, modelling and operational planning in NSW will need to consider the revised pricing models and requirements of IPART moving forward.
1. A sharper focus on customer outcomes and benefits
Regulators are increasingly asking embedded networks to deliver better outcomes for their customers in comparison to those afforded customers in the open retail market, while matching the same protections and more closely aligning services.
Continued emphasis on Pricing, transparency and comparability are central to this test, along with greater burdens on exempt sellers and suppliers to provide market aligned customer protections.
2. Divergence of regulation, convergence of expectations.
Exempt sellers are expected to operate closer in line with fully authorised retailer obligations, including increased emphasis on billing clarity, hardship support, plan transparency and customer engagement. Meanwhile, NSW and Victoria continue to implement their own jurisdictional regulation that begins to divert further from the AER’s national framework. This will create further differences and dedicated systems and processes for each jurisdiction.
3. Increased regulation of pricing and bundled services
Regulators are becoming increasingly aware of services being bundled or offered in supplement to standard electricity on-selling. Regulatory approaches and pricing controls are being reassessed within state jurisdictions and likely to be a major focus of regulators moving forwards.
Embedded Network owners and operators should expect a more demanding regulatory environment as we progress through a period of fast-paced and broad jurisdictional change. While there are currently proposed changes to explicit pricing and operational requirements that will place financial and operational pressure, there is also shift at the national level to a principles-based approach that will require a strong understanding of regulatory frameworks. Those who can translate these principles into action and meet the expectations of regulators will be best placed to succeed. However, greater expectations on providers to communicate and act on a principle-approach may also translate to a need for additional resources by retailers and exempt sellers.
Commercial viability and feasibility of embedded networks will depend on their ability to first provide a demonstrable customer benefit, not just cost and revenue management structures. This is most relevant to the directional change in pricing strategies, particularly in Victoria and NSW. The result will be that now more than ever, operational capability in billing, communications and compliance will become a critical and distinct competitive advantage within the market. When paired with new and innovative models and energy strategy in embedded networks, there will be significant scope for separation between those ready to provide the next generation of embedded network services. Embedded networks are no longer being treated as a niche within the energy industry. They are increasingly being integrated into the broader energy market framework, with expectations aligning accordingly. Stakeholders will need to monitor the changes closely to keep pace and prepare for the next phase within the market.
