Today NSW SMall Business Energy Alliance[myalliance.com.au] submitted the following paper on behalf of it’s members:

Embedded Network Tenants in the Australian National Electricity Market (NEM)

Introduction

Embedded networks are private electricity networks that serve multiple premises, such as apartment blocks, shopping centers, and industrial parks. These networks are connected to the national grid through a parent connection point and are managed by an Embedded Network Operator (ENO). Small businesses operating within these embedded networks face unique challenges, particularly in the Australian National Electricity Market (NEM).

Challenges Faced by Embedded Network Tenants t Small business tenants in embedded networks often suffer from unacceptably low discount offers and a lack of direct Network Use of System (NUOS) billing to the ENO. This situation is exacerbated by the close relationships between retailers and Embedded Network Managers (ENMs) and ENOs, which can lead to anti-competitive behavior.

  1. Low Discount Offers: Small business tenants in embedded networks frequently receive lower discount offers compared to their counterparts in the broader market. This disparity is due to the limited bargaining power of tenants and the monopolistic control of ENOs over the network.
  2. Lack of NUOS Billing: The absence of direct NUOS billing to the ENO further complicates the situation for tenants. Without transparent and direct billing, tenants are often left in the dark about the actual costs and charges associated with their electricity usage.
  3. Anti-Competitive Behavior: The close relationships between retailers and ENMs/ENOs can lead to anti-competitive practices. Retailers may be reluctant to offer competitive rates to tenants within embedded networks to maintain their relationships with ENMs and ENOs. This lack of competition results in higher costs for tenants and limits their ability to access better deals in the market.

The Role of Regulators and the AEMC

The Australian Energy Market Commission (AEMC) and other regulators play a crucial role in ensuring fair competition and protecting the interests of small business tenants in embedded networks. However, without adequate support and intervention from these regulatory bodies, tenants will continue to face significant challenges.

  1. Regulatory Support: Regulators must enforce rules and guidelines that promote transparency and fair competition within embedded networks. This includes ensuring that tenants have access to competitive retail offers and are not subjected to monopolistic practices by ENOs.
  2. NUOS Billing: Implementing direct NUOS billing to the ENO can enhance transparency and allow tenants to better understand their electricity costs. This change would also enable tenants to make more informed decisions about their energy usage and potential savings.
  3. Addressing Anti-Competitive Behavior: Regulators must actively monitor and address any anti-competitive behavior within embedded networks. This includes ensuring that retailers do not collude with ENMs and ENOs to the detriment of tenants.

Conclusion

Small business tenants in embedded networks face numerous challenges, including low discount offers, lack of NUOS billing, and anti-competitive behavior. Without the support of regulators and the AEMC, these tenants will continue to suffer and be pushed out of the competitive retail market. It is imperative that regulatory bodies take decisive action to protect the interests of small business tenants and promote fair competition within the Australian NEM.

What’s Next?
We will keep out members updated on any response and future actions that may occur as a result of this submission.
Andrew Smith
Founder|CEO
NSW Small Business Energy Alliance
Embedded Network Tenants in the Australian National Electricity Market.pdf