Victorian Default Offer price review 2021

We amended the default offer price for changes in network costs

In November 2020 we made our determination on the Victorian Default Offer prices for 2021. In this determination we used tariffs approved by the Australian Energy Regulator for the period 1 January to 30 June 2021. The approved network tariffs for the second half of the year were not available at that time.

On 15 June 2021, the Australian Energy Regulator approved the Victorian distribution network businesses' network prices applying from 1 July 2021. In July 2021 we amended the Victorian Default Offer 2021 price determination to reflect these new network prices from 1 September 2021.

Households on the default offer will pay around $4 a month more, on average, as a result of the changes in network costs.

The amended price determination applies to the tariffs licensed retailers (who sell electricity in Victoria) can charge residential and small business customers during the regulatory period 1 September–31 December 2021. The Victorian Default Offer also applies as a maximum price for most residential and small business customers in embedded networks.

You can also read our media release about this decision.

In amending the Victorian Default Offer 2021 price determination, we ran a public engagement process to ensure the views of interested stakeholders were heard and considered.

In 2021 we issued a consultation paper and a draft decision paper for stakeholder feedback. We also held a public forum attended by 65 stakeholders. These activities were in addition to the extensive consultation we undertook in 2020 on options for reflecting anticipated changes in network tariffs in the VDO.

We considered stakeholders' submissions in making our final decision. You can read our public engagement summary for more details.

Prices from 1 September to 31 December 2021

Default offer flat tariffs

Each Victorian Default Offer flat tariff includes a daily supply charge and a usage charge (per kilowatt hour). Differences in tariffs across distribution zones reflect the unique costs of providing electricity services in each area.

Residential customers (GST inclusive)

Small business customers with consumption less than 40 MWh per year (GST inclusive)

Default offer two period time of use tariffs

The Victorian Default Offer two period time of use tariffs include a daily supply charge and usage charges (per kilowatt hour) for peak and off peak periods. Differences in tariffs across distribution zones reflect the unique costs of providing electricity services in each area.

Residential customers (GST inclusive)

Small business customers with consumption less than 40 MWh per year (GST inclusive)

Our November 2020 decision for the 2021 VDO price determination led to an average annual bill reduction of 10 per cent for residential customers and 14 per cent for small business customers (when compared with the prices for the 2020 Victorian Default Offer). The savings were mainly due to forecast decreases in wholesale electricity and network costs.

The price determination applies to the tariffs licensed retailers (who sell electricity in Victoria) can charge residential and small business customers during the regulatory period (1 January 2021 to 31 August 2021).

Maximum prices for most residential and small business customers within embedded networks are set at the level of the Victorian Default Offer. Embedded networks servicing those customers must ensure that from 1 January 2021 their charges do not exceed the level of the 2021 Victorian Default Offer. More information on this ruling is available in our final decision on the maximum electricity prices for embedded networks and other exempt sellers.

Submissions to the draft decision

We received eight stakeholder submissions from five retailers, the peak body representing retailers, the national industry group for major shopping centres, and an embedded network operator.

Stakeholders generally supported our approach to varying the current price determination (to account for changes to network costs) commencing 1 September 2021. Stakeholders had differing views on when and how to recover network costs incurred during July and August 2021.

Submissions to the consultation paper

We received 11 submissions from 10 stakeholders: eight retailers, Consumer Action Law Centre and a consumer.

All retailers support the commission's proposed approach to variation, including the introduction of two-period time of use tariffs. Key considerations raised by retailers included timing, materiality and our approach to time of use tariff plus controlled load in AusNet's distribution zone.

Consumer Action Law Centre also generally supports our proposed approach to the variation but suggested we adjust for lower wholesale costs and remove the temporary allowance for bad debt.

Public forum – 20 May 2021

Our public forum on 20 May 2021 provided an opportunity for interested stakeholders to express their views and raise questions about our proposed next steps for the Victorian Default Offer.

Submissions to our draft decision

Draft decision public forum

You can watch the public forum, view presentation slides or review answers to questions asked by attendees.

Submissions to our consultation paper

Consultation paper public forum

You can watch the public forum, view presentation slides or review answers to questions asked by attendees.