Victorian Default Offer price review 2025–26

Overview

We are responsible for setting and annually reviewing the Victorian Default Offer prices. The default offer is designed to be a simple, trusted and reasonably priced electricity option that safeguards customers who are unwilling or unable to engage in the electricity market. 

We are in the process of setting the Victorian Default Offer prices to apply from 1 July 2025 to 30 June 2026. We want to hear your views on our draft decision paper. 

How cost components and annual bills may change under our draft decision

Change in the average Victorian Default Offer annual bill by cost component, for domestic customers with annual usage of 4,000 kWh, $ nominal 

Change in the average Victorian Default Offer annual bill by cost component, for small business customers with annual usage of 10,000 kWh, $ nominal 

How we calculate the Victorian Default Offer

We are required to base the Victorian Default Offer on the efficient costs of the sale of electricity by a retailer. In doing so, we take into account:

• Network costs - based on distributors' network tariffs and metering charges submitted to, and approved by, the Australian Energy Regulator. 
• Wholesale electricity costs - based on the forecast cost of purchasing electricity in the futures market, factoring in a volatility allowance. 
• Environmental costs - based on retailers' costs of complying with environmental obligations imposed under Commonwealth and Victorian law or regulation.
• Retail operating costs - based on the customer-weighted average of the retailers' actual retail operating costs for domestic and small business customers and including a modest customer acquisition and retention cost - based on the average 2013-14 average acquisition cost benchmark updated for inflation. 
• Other costs 
• Retail operating margin - based on a retail operating margin benchmark and having regard to market offer prices relative to default offer prices, the expected returns approach and retailers' actual margins. 
• Network loss factor - based on information from the Australian Energy Market Operator, and applied to wholesale electricity costs, environmental costs and variable other costs. 

Have your say

Consultation on our 2025-26 Victorian Default Offer Draft Decision has now closed. We are reviewing submissions. 

Should you have any questions regarding the draft decision paper, you can contact us via the below contact details: 

• Email: VDO@esc.vic.gov.au
• Mail: Essential Services Commission, Level 8, 570 Bourke Street, Melbourne Victoria 3000
• Phone: 03 9032 1300

Online public forum

We hosted an online public forum on the 2025-26 Victorian Default Offer draft decision paper on 31 March 2025. You can view a recording of our public forum here. 

Next steps

We are reviewing submissions on our draft decision paper on the 2025-26 Victorian Default Offer. 

We will consider submissions and use the feedback to inform our final decision paper. 

Our final decision paper is scheduled to be released by 26 May 2025.