Victorian Default Offer prices going up, but here’s how to save


Just months after seeing electricity bills slashed in light of new industry reforms designed to make comparing and saving easier, Victorian households on default tariffs have been told they can expect prices to increase.

The state’s energy regulator has revealed its final determination on pricing for the Victorian Default Offer (VDO) – the default tariff that all electricity retailers are required to offer customers, acting as a price cap for those who do not engage in the market and shop around.

The Essential Services Commission (ESC) says annual electricity bills for a typical domestic customer on a flat tariff standing offer will increase from this January, from around $1,400 currently to around $1,500, on average across all distribution zones.

A typical small business customer on a flat tariff standing offer will also see their annual electricity bill increase. Based on 20,000 kilowatt hours (kWh) annual consumption, the average annual bill will increase from around $5,900 currently to around $6,400 in 2020, on average across all distribution zones.

However, the ESC insists that average annual bills for customers on flat tariff standing offers will remain lower than prior to the introduction of the VDO in July 2019.

“We estimate that the annual bill for a typical domestic customer on the VDO in 2020 could be around $200 to $330 per year lower than prior to the introduction of the VDO. The annual bill for a typical small business customer could be around $1,000 to $1,600 lower than prior to the introduction of the VDO,” the ESC says in its final price determination report.

The ESC has put the price increase down to higher wholesale electricity purchase costs and network charges, noting that market expectations for wholesale electricity prices in 2020 have increased significantly in recent months.

While the VDO is designed to act as a safety net for households to avoid paying too much, there are many electricity market offers currently priced lower.

“The VDO is intended to reflect a reasonably priced electricity option and provide a safeguard for customers unable or unwilling to engage in the electricity retail market,” the ESC explains.

“While the VDO is generally available to domestic and small business customers, our price determination only applies as a default to around 5 per cent of households and 15 per cent of small business customers.

“The VDO does not necessarily reflect the best offer available to customers. Customers may be able to access a market offer with better prices than the VDO. We note that under the recent reforms implemented by the commission, a retailer must regularly tell customers whether they are on the retailer’s best energy plan, and how much the customer could save by switching.”

Cheaper prices than the VDO

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.

Image credit: Daniel De Petro/

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