Government Responds to IPART Review of Embedded Networks in NSW

In a previous edition of Outasite Lite we reported that the Government had accepted 36 of the 38 recommendations made by the Independent Pricing and Regulatory Tribunal’s (IPART) in their review of embedded networks in NSW.

The IPART review covers all manner of embedded energy networks from electricity, gas, hot and chilled water so not all are relevant to residents in land lease communities. This article focuses on the Government’s response to recommendations made by IPART relating to electricity services from an embedded network.

IPART as the Regulator for Pricing

A few recommendations from the review encouraged the Government to consider appointing IPART as the most appropriate regulator in the energy market to monitor and set benchmark pricing.

The Government expressed its support for the enactment of legislation that will authorise IPART to:

• Determine maximum price protections.
• Review and update maximum prices annually to reflect market conditions and to align the process for embedded network pricing with that for authorised retailers.

Amendments last year to the Residential (Land Lease) Communities Act 2013 (RLLC Act) and Residential (Land Lease) Communities Regulation 2015 (RLLC Regs) had already authorised IPART to perform these functions specifically for land lease communities.

IPART proposed to use a new methodology when setting the maximum price for electricity, and this has also been accepted by the Government. The new method will be based on the median of the lowest market offers generally available in each distribution area. For residents in land lease communities this will be an improvement on the current pricing methodology used, which is based on the median market offers generally available in each distribution area.

IPART as the Regulator for Compliance

The Government expressed support for IPART being appointed as the regulatory authority who investigates and enforces compliance.

Legislation will be enacted to:

• Establish a statutory framework which allows IPART to request documents from the embedded network seller, for the purpose of monitoring and investigating compliance with maximum pricing.
• Authorise IPART to give directions to an embedded network seller to take an action within a specified timeframe around compliance issues.
• Allow IPART to consider any actions taken by an embedded network seller to address non-compliance, without removing IPART’s power to issue a directive or penalty.
• Make it an offence, which may attract a monetary penalty for:
  • failing to comply with IPART’s maximum price determinations.
  • not supplying documents when asked.
  • not complying with a direction by IPART within a specified timeframe.

Other gaps for embedded network customers and exempt sellers

The Government has acknowledged that improvements are needed to ensure customers in embedded networks have similar access to consumer benefits and protections as ‘on market’ customers when installing sustainability infrastructure such as roof top solar.

This was also one of the recommendations that came out of the statutory review of the RLLC Act in 2021 and we anticipate more clarity around how this will be implemented in ‘phase two’ of the amendments to the RLLC Act and other legislative reforms expected in 2026.

IPART proposed that exempt sellers should be able to apply time of use tariffs such as peak, off peak and shoulder charges. This was conditionally accepted so long as they do not exceed default market offer pricing.

The Government reasoned that if customers have the option of reducing their demand when the grid is busiest there would be a cost benefit for the customer.

Support was also expressed in principle for embedded network sellers to be given sufficient notice and opportunity to renegotiate their contracts at the parent meter after price reviews by IPART.

IPART did not suggest a notice period for embedded network customers when prices change due to an IPART review or other reasons.

Residents have been enquiring with the Tenants' Union about their rights to sufficient notice of price changes so they can budget accordingly and the Tenants’ Union will continue to provide that feedback to Government.

The Government agreed with IPART’s recommendation that exempt sellers should be required to publish information on their websites stating where they provide embedded network services and their pricing. Legislation will be enacted to ensure that this happens and where they do not have a website they will be required to provide that information to the regulator who will make it available on their website.

We know most operators are charging the maximum price that IPART sets and that is what we expect to see published on land lease community websites. Increased visibility of embedded networks is welcomed however it is unclear how publishing electricity charges for embedded networks would improve market choice or competition when the majority are charging the IPART maximum.

The Government responses indicated that more work may be needed to address concerns from stakeholders about the price setting process. This is particularly true for home owners in land lease communities who have been entitled to information about an operator’s retail contract and charges at the parent meter due to the inclusion of section 77A  in the 25th September 2025 amendments to the RLLC Act. That information has shown excessive profit margins many operators achieve from their unrestrained permission to charge residents according to the IPART maximum price caps.

Much of the legislation needed to progress the legislative framework for embedded networks has already been developed and introduced under the Energy Legislation Amendment Bill 2025.