Crunch time for Victorians as VDO energy price rises

It’s crunch time for many Victorians as a price hike to the state’s default energy tariff is set to add more pressure on household bills.

From September 1, power companies will increase prices on basic or standing offer plans with the benchmarked price – formerly known as the Victorian Default Offer (VDO).

The new VDO will rise on average by around $53 a year across Victoria’s five distribution networks, meaning customers still on standing offers will likely see their bills rise.

Applicable customers should have been notified by now that energy rates are changing, either on a previous bill or separate communication from their retailer.

Customers may also see messaging from power companies, like Origin Energy below, on their websites as a reminder that bills may increase from 1 September 2021.

Origin Energy VDO price change banner

There are currently around 120,000 residential customers and 30,000 small businesses on the VDO, according to Victoria’s energy regulator.

While it’s certainly crunch time for these Victorian customers, a change to the VDO usually results in retailers updating prices on the more competitive deals in market, Canstar Blue’s Energy Editor Jared Mullane explained.

“As the Victorian Default Offer rises in price, many electricity providers will make adjustments to their rates on market offers – deals that are usually much cheaper than the VDO,” he said.

“It’ll be interesting to see which companies emerge the cheapest in Victoria once the dust settles, but it also highlights why consumers should always keen an eye on movements in the market and take advantage wherever they can.”

Victorian Default Offer as of 1 September 2021

To use the Victorian Default Offer as a reference point when comparing plans, you’ll need to understand which distribution network you live in, because the annual cost of the VDO differs between areas of Victoria. The below table shows VDO prices across the state’s five distribution areas, based on annual energy usage of 4,000kWh/year.

Distributor VDO before 1 September 2021 VDO from 1 September 2021 Annual Price Increase
Citipower $1,270 $1,336 $66
Jemena $1,328 $1,387 $59
United Energy $1,319 $1,350 $31
Powercor $1,368 $1,425 $57
Ausnet Services $1,507 $1,560 $53

Source: Essential Services Commission amendment to price determination 2021, final decision

Cheap Electricity Plans in Victoria

Below are some of the cheapest energy plans in Victoria where you can see how prices stack up against the VDO. Click on your distributor to see relevant pricing or if you’d like a specific range of electricity quotes in your area, please use our free comparison tool.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Jemena network in Sunbury but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the United Energy network in Frankston but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Powercor network in Geelong but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the AusNet network in Warragul but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

VDO prices from 2019 to now

Since its inception in July 2019, the VDO has changed a handful of times to align with market conditions. Here is an overview of VDO prices:

Distributor July 2019 January 2020 January 2021 September 2021
Citipower $1,334 $1,420 $1,270 $1,336
Jemena $1,385 $1,496 $1,328 $1,387
United Energy $1,381 $1,508 $1,319 $1,350
Powercor $1,411 $1,517 $1,368 $1,425
Ausnet Services $1,520 $1,646 $1,507 $1,560

Introduction of a ‘two-period time of use VDO’

Not only is the VDO changing in price for residents on a single rate tariff, there’s also been a new default tariff introduced for customers connected to a time of use tariff. This means that households with a smart meter installed that have access to peak and off-peak electricity rates will now have a reference price to compare deals from.

The new two-period time of use network tariff will be the default tariff for approximately 400,000 customers, 15,000 of which are currently on the VDO. Peak times on this time of use default tariff are:

  • Residential: 3pm to 9pm every day
  • Small business: 9am to 9pm every day

Off-peak times for both residential and small business customers will be at all other times.

The ESC claims the two-period time of use VDO should leave customers either better off or the same when compared on price to a representative bill. This is largely due to new time of use peak periods being much shorter than other network flexible pricing tariffs.

What is the VDO and why is it changing in September?

The VDO usually changes on the 1st of January each year, however this year retailers have had to align pricing with the Essential Services Commission’s decision to change prices that reflect updated network costs. A recent Canstar Blue survey found that less than a third of Victorians were aware of the VDO’s inception in 2019, which was introduced as a means to offer some level of protection for consumers who don’t actively engage in the market.

Image credits: Kreatica/Shutterstock.com, Origin Energy

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