Victoria’s Essential Services Commission (ESC) has released its draft decision on the 2024–25 Victorian Default Offer for public consultation.
The draft decision proposes to reduce the Victorian Default Offer by around $112 (or 6.4 per cent) for residential customers and around $266 (or seven per cent) for small business customers from 1 July 2024.
The Victorian Default Offer is designed to provide Victorian consumers access to a fair electricity deal, and acts as a reference price so customers can more easily compare different deals in the market.
It is also the maximum amount that electricity retailers can charge Victorian customers in embedded networks, such as apartment buildings and office blocks.
Around 360,000 residential and 58,000 small business customers are currently on the Victorian Default Offer. There are also 176,000 customers in embedded networks in which the Victorian Default Offer applies as a maximum charge.
Lower futures contract prices for wholesale electricity are primarily responsible for the reduction in the proposed 2024–25 default offer rate. Futures contract prices are included in the metrics used to calculate the Victorian Default Offer. The impacts of lower electricity purchase costs were partly offset by increases in network and retail costs.
ESC Chairperson, Kate Symons, said that while the Victorian Default Offer is based on an assessment of the efficient costs retailers need to recover to provide electricity, many customers will be able to find a cheaper offer if they shop around.
“The Victorian Default Offer provides a safety net, ensuring those who don’t engage in the market still pay a fair price for their electricity usage. However, many retailers offer deals that are cheaper than the Victorian Default Offer, and we encourage all consumers to shop around.
“The Victorian Energy Compare website is the free and independent Victorian Government online energy price comparison service. In a few simple steps, it can help you to identify what offers are available to you and how much they are likely to cost based on your previous usage,” Ms Symons said.
Ms Symons also said the reduction proposed in the draft decision followed the relatively large increase in the Victorian Default Offer in 2023-24, which reflected increasing wholesale costs at the time that are now on a downward trend.
“We understand affordability remains front of mind for consumers. Electricity retailers are obliged to communicate their best electricity offer to customers on their bills at least once every three months. They must also assist customers experiencing bill stress.
“Victorian energy customers are entitled to a range of assistance from their retailers. If you’re having trouble paying your energy bill, you can ask your retailer for help. Retailers are obliged to provide assistance such as payment plans and help applying for Victorian Government energy concessions and utility relief grants,” Ms Symons said.
The commission has used the same methodology applied in the current Victorian Default to arrive at the draft decision for 2024-25.
The draft decision on the Victorian Default Offer for 2024-25 will be open for comment on Engage Victoria until 19 April 2024. The commission will hold a public forum on 28 March 2024 with registration available now on Engage Victoria. The final decision is expected to be released in late May 2024.
The final decision on the Victorian Default Offer will consider feedback from stakeholders, movements in key market data, including wholesale electricity costs, since the publication of the draft decision, and the final network tariffs that will apply for 2024-25, which will be approved by the Australian Energy Regulator in May 2024.
