The Victorian Default Offer is a simple and trusted electricity price set by the Essential Services Commission rather than energy retailers. It provides Victorians with access to a fair electricity deal even if they are unable or unwilling to engage in the retail market.
Pricing director Marcus Crudden said the commission is seeking stakeholder feedback on how it proposes to assess the costs of providing electricity to Victorian households and small businesses.
“Our proposed approach to setting the default offer is largely unchanged from last year. However, sharp increases in wholesale prices this year and subsequent market interventions mean there are additional costs and community impacts that we need to consider, and we are keen to hear from stakeholders on these matters,” Mr Crudden said.
Cost components assessed by the commission as part of its default offer pricing review include wholesale electricity costs, generation, transmission and distribution costs, environmental costs, and retail costs to cover finance, billing, managing wholesale risk and customer service. The commission is also interested to hear from stakeholders on credible alternatives to assess the impact of inflation on retailers’ costs.
“The Victorian Default Offer is an important safeguard for many Victorians, but there might be better deals out there so do shop around. A good place to start when comparing offers is the free and independent website Victorian Energy Compare,” advised Mr Crudden.
Mr Crudden said retailers must regularly include information about their best offers on customers’ bills, however energy consumers should also contact their retailer to check they’re on the best deal.
“And if you’re having trouble paying your energy bills, talk to your retailer about payment plans, and what concessions, rebates, or utility relief grants might be available. Help is out there, and we want to make sure Victorian energy consumers are getting the assistance they are entitled to,” he said.
Submissions on the Essential Services Commission’s 2023-24 Victorian Default Offer consultation paper close on 30 January 2023. Submissions should be lodged at Engage Victoria or by emailing VDO@esc.vic.gov.au for more information.
The 2023-24 Victorian Default Offer draft decision will be published for consultation in March 2023, with a final decision expected in May 2023.
About the Victorian Default Offer
The Victorian Default Offer is a simple and trusted electricity price that is set by the Essential Services Commission, not energy companies. It provides Victorian consumers access to a fair electricity deal even if they are unable or unwilling to engage in the retail market.
The commission sets the default offer each year after assessing the efficient costs retailers need to recover to provide electricity to Victorian customers. The default offer will not necessarily be the lowest price available.
Who can ask for the Victorian Default Offer
Most Victorian households and small businesses can ask for a default offer. Small business customers that use less than 40 megawatt hours of electricity per year can also ask to be put on the default offer.
The default offer is also a price cap that applies to most customers that have their electricity supplied by an embedded network, such as apartments, retirement homes, caravan parks, or shopping centres.
Around 330,000 households (12 per cent) and 49,000 small businesses (17 per cent) are currently on the Victorian Default Offer, as well as around 140,000 embedded network customers.
Energy retailers must make the Victorian Default Offer available to customers who request it but can continue to offer different customers contracts through market offers.
The default offer also acts as a reference price that retailers must use to advertise the discounts on their market offers. This can help customers find the market offer that will give them the best value for money.
The Victorian Default Offer regulates standing offer prices
The default offer the commission sets applies to standing offers. Standing offers are contracts that electricity retailers must provide service under if you:
never signed up for an electricity contract
entered an electricity contract, cancelled the contract within the cooling-off period, but continue to use electricity without entering another contract
moved into a new address and use electricity without entering a contract or
specifically asked for a standing offer or
moved onto a standing offer after their market offer contract came to an end.
In comparison, market offers are competitive offers set by electricity retailers and may include a discount. The Essential Services Commission does not set market offer prices.
If you are on a market offer, you can request to be moved on to the Victorian Default Offer or use the default offer as a comparison point to see if you are getting a good deal. The default offer will not necessarily be the lowest price available to you. We recommend shopping around to find the right retail electricity offer for you. Find out which offer you're on by asking your energy retailer or checking your bill.
