With energy prices skyrocketing in recent years, changes have been introduced to make electricity ‘fairer’ for all Victorians. In July 2019, customers in Victoria on standing offers – a basic energy plan usually with higher rates – were rolled over to what’s called as the ‘Victorian Default Offer’ or ‘VDO’. Essentially, this means that bill-paying customers who weren’t actively engaged in the market and were likely paying more than market offers, weren’t left on expensive electricity plans by retailers.
The VDO still plays a significant role in the market today, helping consumers to compare electricity pricing in a simpler and ‘fair’ way. In this guide we will explain how this offer plays into energy billing and how you can make it work for you.
On this page:
- What is the Victorian Default Offer?
- How does the Victorian Default Offer work?
- Plans cheaper than the Victorian Default Offer
- Why was the Victorian Default Offer introduced?
- How much does the Victorian Default Offer cost?
- What is the ‘two-period time of use VDO’?
- What are the pros and cons of the VDO?
- How do I know if I’m on the VDO?
- Victorian Default Offer: Key Points
- How to find a great energy deal
What is the Victorian Default Offer?
The Victorian Default Offer (VDO) acts as a safeguard for customers in Victoria who are on expensive ‘standing offer’ contracts with their current energy provider. On July 1 2019, Victorian residential and small business customers on standing offers were moved to the VDO – what’s described by the state’s energy regulator as a “fair” price for electricity.
Similar to the reference price for energy in other states, the Victorian Default Offer is aimed at providing customers who do not engage in the market with electricity prices that are capped and more competitive. Approximately 400,000 residential and 55,000 small business customers in Victoria are connected to the VDO as of May 2023.
How does the Victorian Default Offer work?
The VDO acts as a price cap for customers who do not engage in the energy market, but it also serves as a reference price when comparing plans with discounts. Energy plans with discounts must have the same base pricing as the VDO and show how the discounted plan compares to the estimated annual cost of the VDO, either in monetary or percentage terms. This is why you may see plans marketed at ‘10% less than the VDO’, or ‘5% more than the VDO’, for example.
Plans cheaper than the Victorian Default Offer
The Victorian Default Offer is a competitive power price, but you could still save even more by shopping around and switching to one of the cheapest deals in Victoria. To help you find a better deal, the following table lists some of the cheapest electricity plans across all five of Victoria’s distribution networks, in our database.
Cheap Deals in Victoria
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.
Why was the Victorian Default Offer introduced?
The VDO was introduced on the back of an independent review from government and industry regulators that found Victorian customers were paying too much for electricity. The Victorian Default Offer is part of a larger government initiative planned to make the retail market easier to navigate, as well as more affordable for households and small businesses.
How much does the Victorian Default Offer cost?
The price of the VDO will vary depending on which distribution zone you live in. To use the VDO as a reference price when comparing plans, you’ll need to understand which energy 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 for single-rate tariffs, based on specific energy usage requirements.
| Distribution Zone | 4,000 kWh/year |
|---|---|
| AusNet Services | $2,026 |
| Citipower | $1,571 |
| Jemena | $1,720 |
| Powercor | $1,793 |
| United Energy | $1,666 |
Source: Essential Services Commission (ESC), July 2023.
Victorian Default Offer Supply & Usage rates
Below are the electricity rates an eligible residential customer will pay on the Victorian Default Offer, depending on where they live.
| Distribution Zone | Supply charge (daily) | Usage charge (per kWh) | Usage charge – Controlled load (per kWh) |
|---|---|---|---|
| AusNet Services | $1.3251 | $0.3851 (Block 1)
$0.3955 (Block 2) |
$0.2869 |
| Citipower | $1.1525 | $0.2871 | $0.2271 |
| Jemena | $1.1438 | $0.3252 | $0.2639 |
| Powercor | $1.3002 | $0.3292 | $0.2559 |
| United Energy | $1.0814 | $0.3174 | $0.2466 |
Source: Essential Services Commission (ESC), Victorian Default Offer – Final Determination. July 2023.
What is the ‘two-period time of use VDO’?
From September 1 2021, not only had the VDO changed in price for residents on a single rate tariff, there’d also been a new default tariff introduced for customers connected to a time of use tariff. This meant that households with a smart meter installed that had access to peak and off-peak electricity rates now also had a reference price to compare deals from.
The peak time for this two-period time of use network tariff are as follows:
- 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.
What are the pros and cons of the VDO?
If you’re looking for more than just the ‘default’ price on energy, you may find more value in market offers, most of which include competitive rates, incentives and rewards. While households on the Victorian Default Offer are somewhat protected in terms of being on a plan with a capped price, there are a few pros and cons to think about when it comes to the VDO.
Pros
- Fairer electricity prices for customers on standing offers prior to July 2019.
- Energy retailers can’t charge more than the default price set by the Victorian Government.
- Most residential and small business customers have access to the VDO.
Cons
- While the VDO does offer a fairer energy plan for Victorians, there may be cheaper market offers available with lower usage and supply rates.
How do I know if I’m on the VDO?
If you’ve lived at the same address for a while now and you can’t remember the last time you compared energy plans, chances are you’ll be on a standing offer. The easiest way to find out if you’re on a standing offer is to look at your latest energy bill, which should have your contract type listed.
It may be tucked away in the fine print so make sure you scan the breakdown of charges on your bill. Keep in mind, it may not be labelled as ‘standing offer’ on your power bill, instead it could be called something like a ‘standard retail contract’ or along those lines.
Can I switch to the Victorian Default Offer?
Yes, you can switch to the Victorian Default Offer. To do so, you simply need to contact your retailer and ask to be switched to their Victorian Default Offer. Keep in mind however, that depending on your tariff type, e.g. time of use, this process may mean switching tariffs too to be eligible.
Victorian Default Offer: Key Points
Here’s a summary of what the Victorian Default Offer means for you:
- The VDO is the maximum price a customer will pay if they don’t want to engage in the energy market and switch to a market offer
- In some cases, the VDO may be cheaper than some retailer’s market offers
- The price of the VDO will vary between different distribution zones in Victoria
- Retailers that advertise discounts must use the VDO as a ‘reference price’ when marketing their energy plans
How to find a great energy deal
The Victorian Default Offer will surely have a significant impact on energy prices, but don’t assume you’ll automatically be on the best deal. You’ll also want to double check that you’re getting a deal suitable to your needs, not just your budget.
What do we mean by this? Well, given that competition is fierce in the Victorian energy market, retailers will fight tooth and nail for your business, meaning you could take advantage of other value-add incentives, like customer rewards or sign-up credits. Canstar Blue gives you the power to compare the features in a range of plans from Victoria’s biggest energy providers. Hit the link below to get started.
Image credits: Boyloso/Shutterstock.com, Iassedesignen/Shutterstock.com, tommaso79/Shutterstock.com
Original Author: Jared Mullane
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