Australia’s embedded network landscape is a peculiarly intricate tangle of nuance, complexity and regulatory optimism. Note that the embedded networks are distinctly unique and different from retail utility providers.
Please bear with my lengthy explanation for a few rather long moments.
Embedded networks are private distribution systems sitting behind a single connection to the public grid (shopping malls, apartment blocks, retirement villages, camp and caravan sites etc). They all have, effectively, a single wire going into the site.
Originally, they were designed for incidental on-selling by site managers, and they are a regulatory exception allowing the operator to on-sell electricity and other services without becoming a fully authorised energy retailer or licenced distributor. The embedded networks typically bundle: 1) electricity, 2) centralised hot water, 3) cold water, 4) gas, 5) heating / cooling (air-conditioning) and 6) fibre to the premises (sometimes, not always). All those things are governed by separate statutes.
In theory as well as occasionally in practice, they should be cheaper for consumers because they are able to negotiate lower wholesale rates from the upstream supplier and because the customer churn is non-existent (the customer is locked into the network and has nowhere to go). In some cases, that is indeed true, but because the current legislation explicitly excludes the embedded networks from the government reporting, many embedded network operators have resorted to the insidious exploitation of their customers, and the government is clueless because the operators' imposed pricing is opaque.
Natiaonally, Australia does not have a single federal embedded-network statute. The principal framework is a cooperative national scheme comprising 7 government bodies (Australian Energy Market Commission, AER, Australian Energy Market Operator, National Electricity Law and Rules, National Energy Retail Law and Rules, Australian Consumer Law and Australian Competition and Consumer Commission).
At the state level – so far – only Victoria has largely banned new embedded networks, with the remaining states either participating or not participating in the National Energy Customer Framework. Overall, NSW, Victoria, Western Australia and the national regulators are tightening the rules but they still have a way to go.
For a reform such as embedded-network regulation, the path looks closer to:
Voters ↝ political parties ↝ MP's ↝ ministers ↝ departments ↝ intergovernmental bodies ↝ regulators ↝ consultation processes ↝ rule-making bodies ↝ implementation.
An MP may understand: «Residents in apartment towers are getting poor outcomes». They are highly unlikely to understand: a) market settlement arrangements, b) metering identifiers, c) distribution-loss factors, d) retailer-of-last-resort frameworks, e) exemption classes, f) embedded-network-manager functions, or g)interactions between state strata law and national electricity law.Unsurprisingly and consequently, politicians become heavily dependent on: a) departmental advice, b) regulator advice, c) industry submissions, d) consultant reports, and e) lobby groups.
The people who understand the system – and especially those one who know how to work the system to their benefit – therefore acquire disproportionate influence over how the system evolves. That does not necessarily imply corruption, it is a structural feature of technical governance. Customers, however, refer to it as «rent seeking», even if they own an apartment.
Despite all that, elected representatives still do remain one of the few machineries capable of changing the underlying legal framework. The deeper issue is that modern regulatory states are neither pure democracies nor pure technocracies – they are hybrids. Formal authority remains democratic, but practical power is distributed among elected officials, bureaucracies, regulators, courts, industry participants, consultants, lobbyists and organised interest groups.
I have recently gone down the rabbit hole of the embedded networks and learned a bewildering number of things hence the fulmination.
Plus, extra Internet points for using this Unicode char that I didn't know about: ↝