As discussed in the ACCC’s Preliminary Report, consumers living in rental accommodation or within an embedded network are limited in their energy choices and can find it difficult to access consumer protections available to other consumers.
Although not always the case, many vulnerable consumers live in these types of accommodation, particularly consumers in public housing. Embedded networks regulation has been the subject of a number of ongoing reviews and analysis by the AEMC, AER and the Victorian Government. This has produced a number of recommendations designed to enhance competition and improve consumer protections for embedded network customers. An outline of these reviews, their findings and planned next steps is in appendix 3. The proposed changes include a range of measures designed to assist consumers including better information disclosure, access to ombudsmen schemes and dispute resolution (which has been implemented by the AER and ESC Victoria). They also include provision for monitoring and enforcement and measures to improve access to competition within embedded networks. Given this extensive work already underway, the ACCC considers that improvements to the embedded network consumer experience will be made through these processes. The ACCC acknowledges that consumers who rent, particularly consumers in public housing, face restrictions in their ability to improve the energy efficiency of their homes and reduce the cost of their electricity supply. They are unable to easily purchase products such as insulation or solar panels. Poor design and lack of maintenance of many rental properties are also an issue, with ill-fitting windows and doors and poor heating options creating high bills. A particular issue facing those in rental accommodation is that they have limited access to solar PV systems. In the Colmar Brunton survey, approximately 21 per cent of all respondents have solar, whereas less than 1 per cent of those in public rental and only 6 per cent of those in private rental have access to solar PV systems.
Appendix 3
The AEMC’s report found that the current regulatory arrangements for embedded networks are no
longer fit for purpose. In particular:
- some customers are unable to access competitive prices or important consumer protections
- customers in embedded networks often pay close to the maximum allowable price as there are limited incentives for embedded network operators to pass on savings to small customers
- there are significant practical barriers to customers accessing retail market competition and therefore customers have a limited ability to switch
- there is limited monitoring and enforcement in regards to embedded network operators’ compliance with their obligations
The AEMC recommended changes to the current regulatory framework for both legacy networks and new embedded networks to provide embedded network customers with appropriate levels of access to retail competition, noting that customers in embedded networks will need to make an initial investment to install a new grid-connected meter in order to obtain electricity from an alternative retailer.
The AEMC also recommended that the COAG Energy Council, state governments and the AER implement changes as soon as possible to improve consumer protections relating to:
- information disclosure regarding the cost, benefit and risks of embedded networks at the time of the purchase or lease of a property
- access to energy ombudsman schemes
- monitoring and enforcement to the extent possible.
Other relevant work
In March 2018, the AER released revised versions of the Retail Exempt Selling Guidelines and Network Service Provider Registration Exemption Guideline. These guidelines apply to sellers and exempt network operators that have been exempt from holding a retailer authorisation or network registration respectively.
The guidelines now facilitate access to energy ombudsman schemes for residential customers of exempt sellers, and place obligations on exempt sellers and exempt network operators to put in place complaints and dispute handling processes. The AER also made a number of amendments to better align consumer protections for customers in exempt networks to the protections that apply to customers of authorised retailers, including an obligation to supply, and requirements around reconnection and payment plans.
The Victorian Government has reviewed its General Exemption Order, which allows certain embedded network operators to sell electricity without obtaining a retailer licence.
Following its review, the Victorian Government updated the General Exemption Order to ensure customers in embedded networks have the same protections as customers in other networks. This includes the requirement for embedded network operators to become members of an approved dispute resolution service by 1 July 2018
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