Energy bills to drop by up to 14% for Victorians on default offers

Default energy offers in Victoria for residential and small business customers are set to become cheaper from January 2021 thanks to falling wholesale electricity prices.

Victoria’s energy regulator has released a decision stating that the Victorian Default Offer (VDO) will drop by $159 per year (10 per cent) on average for households, and $916 per annum (14 per cent) on average for small businesses.

Essential Services Commission (ESC) pricing director, Marcus Crudden, said this outcome will offer financial relief to approximately 120,000 households and 40,000 small businesses.

“The fall in the default offer is being mainly driven by lower wholesale electricity purchase costs, with lower prices likely to assist many Victorian households and small businesses in recovering from the impacts of the coronavirus pandemic,” he said.

Mr Crudden added that the ESC considered all feedback from stakeholders, including energy providers.

He said: “While most costs that make up the default offer price are falling, we have temporarily increased the allowance for bad debts following our careful assessment of information retailers provided us in response to our September draft decision.”

Households living on the United Energy network – covering suburbs such as Frankston and Rosebud – will see the biggest price cut of $189 compared to this year’s VDO pricing.

This decision also extends to 140,000 Victorians living in apartments, which only recently introduced a price cap for embedded network customers.

The VDO is essentially a maximum price energy retailers can charge customers who don’t engage in the market, meaning they’re protected by a price cap, explained Canstar Blue Editor-in-Chief, Simon Downes.

“The Victorian Default Offer was introduced in 2019 to stop power companies from cashing in on customers who were left on expensive standing offers, by transferring them to a fairer deal known as the VDO,” said Mr Downes.

“While the VDO does provide some level of protection for those who are less engaged in the market, there are still plenty more savings to be had by switching to a competitive market offer – plans that can include cheaper electricity rates, discounts and other incentives.

“There were concerns that the introduction of the VDO would mean there was less benefit to shopping around, but with the cheapest deals in Victoria now up to 23 per cent less than the regulated price, it’s clear that competition is still working and consumers can make notable savings, while protecting those who don’t engage in the market.”

Compare Victoria Electricity Prices

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†. 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 and to see other products in our database that may be available. 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. The next three tabs feature products exclusively from AGL, EnergyAustralia and Origin.

Here are the AGL Energy plans on our database for Victoria. These are products from a referral partner†. 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 and to see other products in our database that may be available. 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 the EnergyAustralia plans on our database for Victoria. These are products from a referral partner†. 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 and to see other products in our database that may be available. 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 the Origin Energy plans on our database for Victoria. These are products from a referral partner†. These costs are based on the Citipower energy 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 and to see other products in our database that may be available. 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.

What are the new VDO prices?

The table below outlines the Victorian Default Offer across each distribution network. These prices are based on general electricity usage of 4000kWh/year for a residential customer on a single rate tariff. Prices may vary depending on personal circumstances.

Distributor 2020 2021
Citipower $1,420 $1,270
Ausnet $1,646 $1,507
Powercor $1,517 $1,368
United Energy $1,508 $1,319
Jemena $1,496 $1,328

Source: Essential Services Commission, Victorian Default Offer Price Determination 2021, Schedule 3.


Image credit: Alex Cimbal/Shutterstock.com

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