Regulator announces $100 cut to default electricity price for Victorian households

The Essential Services Commission has released its final decision on the Victorian Default Offer electricity price, locking in lower prices for consumers and small businesses. 

From 1 July 2024, the average rate Victorian Default Offer customers pay for their electricity will reduce by around $100 (or 6 per cent) for residential customers and around $260 (or 7 per cent) for small business customers. 

Around 340,000 residential and 58,000 small business customers are currently on the Victorian Default Offer. There are also 180,000 customers in embedded networks, such as apartment buildings and office blocks, in which the Victorian Default Offer applies as a maximum charge. 

Essential Services Commission CEO Sarah Sheppard said the decision is good news for Victorian consumers, reducing typical household bills by up to $124 a year in some distribution areas.

“A typical domestic customer on the Victorian Default Offer will save $100 a year, and a typical small business customer will save $260 a year.”

In formulating the final decision, the commission considered feedback from stakeholders, movements in key market data, and the final network tariffs for 2024–25 approved by the Australian Energy Regulator in May.

Lower futures contract prices for wholesale electricity are primarily responsible for the reduced 2024–25 default offer rate. The impacts of lower electricity purchase costs were partly offset by increased network costs, which were updated after the draft decision to reflect higher tariffs set by the Australian Energy Regulator.

Ms Sheppard thanked all stakeholders for providing their views to inform the final decision. 

“We heard strong feedback from stakeholders that cost-of-living pressures continue to make it difficult for many in our community. Affordability and consumer protections remain a key focus for the commission,” Ms Sheppard said.

In addition to the $100 saving for Victorian Default Offer customers, all Victorian households will benefit from the $300 energy bill rebate announced in the Federal Budget. Those experiencing financial difficulty may also be eligible for additional Victorian Government energy concessions and Utility Relief Grants.

The Victorian Default Offer is based on an assessment of the efficient costs retailers need to recover to provide electricity. It acts as a reference price so customers can more easily compare different deals in the market.  

“Your electricity retailer is obligated to tell you if they can offer you a better deal at least once every three months. Retailers must also assist customers experiencing bill stress,” Ms Sheppard said. 

“If you’re having trouble paying your electricity bill, ask your retailer for help. You may be entitled to assistance such as payment plans and help applying for Victorian Government energy concessions and Utility Relief Grants.”

Consumers can visit the Victorian Energy Compare website, the free and independent Victorian Government online energy price comparison service, to see what offers are available.