The NSW Parliament has passed comprehensive reforms to embedded network regulation, with the Energy Legislation Amendment Act 2025 receiving assent on 26 November 2025. The Act establishes maximum energy prices and strengthens consumer protections for hundreds of thousands of residents across the state, with IPART’s new pricing powers commencing on 1 July 2026. These changes represent the most significant overhaul of embedded network rules in NSW history.
What Are Embedded Networks?
Embedded networks are private energy networks that supply multiple premises from a single connection point to the main electricity grid. They’re commonly found in apartment buildings, strata schemes, retirement villages, shopping centres, land lease communities and caravan parks. These networks can provide customers with electricity, gas, hot water, chilled water or centralised air conditioning.
While embedded networks can offer benefits such as centralised infrastructure and potentially lower costs, customers within these arrangements have historically faced limited retail competition.
The IPART Review and Government Response
In 2023, the NSW Government tasked the Independent Pricing and Regulatory Tribunal (IPART) with reviewing the future of embedded networks in NSW. This review formed part of the broader NSW Embedded Network Action Plan, which aims to bring outcomes for embedded network customers in line with those in traditional energy supply arrangements.
IPART delivered its final report in May 2024, making 38 recommendations covering maximum pricing methodologies, consumer protections, disclosure requirements and compliance frameworks. In October 2025, the NSW Government released its response, supporting and actioning 36 of the 38 recommendations. The Energy Legislation Amendment Bill 2025 was introduced to Parliament on 14 October 2025 by Minister for Energy Penny Sharpe.
The Energy Legislation Amendment Act 2025
The Energy Legislation Amendment Act 2025 amends multiple pieces of legislation to implement the embedded network reforms. Key amendments relevant to embedded networks include changes to the Electricity Supply Act 1995, the Independent Pricing and Regulatory Tribunal Act 1992, and the Residential (Land Lease) Communities Act 2013.
The reforms deliver on Action 26 of the NSW Consumer Energy Strategy. Schedule 4 of the Act amends the Independent Pricing and Regulatory Tribunal Act 1992 to confirm IPART’s regulatory functions now include the National Energy Retail Law (NSW), Part 5, Division 6A—the division dealing with embedded network price determinations.
IPART’s New Monitoring and Enforcement Powers
Schedule 2 of the Act inserts a new Part 7, Division 4A into the Electricity Supply Act 1995, establishing IPART’s powers to monitor and enforce embedded network pricing compliance. The new provisions define a ‘price determination’ as the maximum price for an embedded network commodity set by the Tribunal under the National Energy Retail Law (NSW), section 116B.
Under the new framework, IPART is empowered to monitor compliance by embedded network sellers with applicable price determinations, investigate an embedded network seller’s pricing and compliance (either following complaints to an energy ombudsman or on IPART’s own motion), require embedded network sellers to provide information by written notice for making price determinations, monitoring compliance, or conducting investigations, and direct non-compliant sellers to take specified action to comply with price determinations.
Mandatory Ombudsman Membership
The Act introduces a significant new consumer protection through new section 96CA of the Electricity Supply Act 1995. Each embedded network operator and embedded network seller must now be a member of an approved energy ombudsman scheme and comply with decisions of the energy ombudsman under that scheme relating to disputes or complaints involving small customers.
This requirement ensures that embedded network customers have access to independent dispute resolution, bringing their protections more closely in line with customers of authorised retailers.
Key Reforms: Maximum Price Protections
The centrepiece of the reforms is the introduction of maximum prices for energy services in embedded networks. Under the new framework, IPART will be authorised to determine and enforce maximum price protections for electricity, gas, hot water and air conditioning supplied through embedded networks.
For electricity the pricing methodology will be based on the median of the lowest market offers generally available in each distribution area, benchmarked against the Energy Made Easy comparison website. This approach differs from the Default Market Offer methodology and is designed to be simpler while ensuring embedded network customers don’t pay more than they would on the competitive retail market. We note that at the same time, a new Default Market Offer will be developed for embedded networks, meaning a continuation of two layers of pricing regulation in NSW.
For land lease communities, Schedule 6 of the Act amends the Residential (Land Lease) Communities Act 2013 to ensure consistency with the new framework. IPART has already made determinations which are in effect in relation to maximum prices for embedded electricity in those communities.
Enhanced Consumer Protections
Beyond pricing, the reforms introduce a suite of consumer protections designed to align the experience of embedded network customers more closely with that of traditional retail customers. Key protections include access to dispute resolution mechanisms through mandatory ombudsman membership, eligibility for energy rebates that were previously unavailable to some embedded network customers, and information rights ensuring prospective purchasers and tenants are informed about embedded network arrangements before committing to a property.
Small business customers within embedded networks will also receive similar protections to residential customers, defined as those consuming less than 100 MWh of electricity or 1,000 MJ of gas per year.
Time-of-Use Tariffs and Flexibility
The reforms provide some flexibility for embedded network operators. IPART’s recommendations allow for time-of-use tariffs such as peak, off-peak and shoulder charges, provided they do not exceed default market offer pricing. The Government’s reasoning is that if customers have the option of reducing their demand when the grid is busiest, there would be a cost benefit for the customer.
Hot and Chilled Water Networks
Notably, IPART recommended that new hot and chilled water embedded networks should not be prohibited. The rationale is that these networks have potential to generate substantial benefits for customers. Over time, allowing hot water embedded networks may increase the likelihood that developers and building owners install low-carbon emission centralised electric hot water systems, which can be provided at significantly lower life-cycle costs compared to centralised gas systems.
Solar Access and Future Reforms
The Government has acknowledged that improvements are needed to ensure customers in embedded networks have similar access to sustainability infrastructure such as rooftop solar. This was one of the recommendations arising from the statutory review of the RLLC Act in 2021, with more clarity expected in further amendments anticipated in 2026.
Industry Considerations
While consumer advocates have broadly welcomed the reforms, some industry stakeholders have raised concerns about potential unintended consequences. The Australian Energy Council has questioned whether the pricing methodology might discourage innovation in the sector. Critics suggest that restricting fixed cost recovery could lead to gas installations instead of electric alternatives, potentially undermining renewable energy and emission reduction goals.
IPART commissioned advice from Axiom Economics on the potential financial and incentive-related impacts of its recommendations. The concern is that the approach limiting cost recovery to operational savings only may suppress capital investment in innovative, efficient or sustainable solutions.
What This Means for Embedded Network Operators
With the legislation now passed, embedded network operators must prepare for significant compliance obligations commencing 1 July 2026. Key preparation steps should include reviewing current pricing against anticipated maximum price benchmarks, ensuring membership of an approved energy ombudsman scheme, establishing or updating website disclosure of service locations and pricing, implementing systems to track and report pricing compliance, ensuring customer communications meet new information requirements, and reviewing contracts with site owners regarding cost recovery arrangements.
Timeline and Key Dates
The implementation timeline for these reforms includes several key milestones. The IPART review was completed in May 2024, followed by the Government’s response in October 2025. The Energy Legislation Amendment Bill 2025 was introduced on 14 October 2025, passed the Legislative Council on 20 November 2025, passed the Legislative Assembly on 21 November 2025, and received assent on 26 November 2025 as Act No 80 of 2025. IPART’s embedded network pricing powers under Schedule 4 commence on 1 July 2026. Annual price reviews will ensure the maximum prices remain aligned with market conditions.
For further information, the IPART embedded networks review page contains the full final report and the NSW Government’s response. The NSW Embedded Network Action Plan provides additional context on the Government’s broader reform agenda. The full text of the Energy Legislation Amendment Act 2025 is available on the NSW Parliament website.
Navigating the evolving embedded network regulatory landscape requires specialist expertise. Compliance Quarter provides comprehensive regulatory compliance services for energy retailers and embedded network operators, including compliance management systems, regulatory monitoring and expert guidance on meeting your obligations under NSW energy laws.
For legal advice on embedded network agreements, contract reviews or energy law matters, contact Law Quarter to discuss how we can assist your organisation.