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

We are seeking submissions on our draft decision paper on the 2025-26 Victorian Default Offer. We will consult on this paper until 11 April 2025.

You may provide your feedback by providing a submission document/s or general comment.

You can provide your submission via Engage Victoria or send it to us via the below contact details:

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

You can also call us on 03 9032 1300 to discuss your options. 

If English is not your first language, please contact TIS National on 131 450 to make your submission using an interpreter. 

Submissions close at 5pm on Friday 11 April 2025. 

Online public forum

We will be hosting an online public forum on the 2025-26 Victorian Default Offer draft decision paper on 31 March at 11am.

You can register to attend the online public forum via our forum event page. 

You can find further details regarding the forum on our event page.

Next steps

The 2025-26 Victorian Default draft decision paper public forum will be held on 31 March 2025 at 11am. 

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