Victorian Energy Market report 2018-19

How much did Victorian customers pay for electricity?

The annual price customers pay for a typical household using 4,000 kWh can vary. The average cost for a Victorian customer on a market contract with conditional discounts in 2018–19 varied between $1,198 and $1,360 for an entire year. The most expensive plans were standard contracts varying from $1,268 up to $1,723 per year (figure 4.3).

We also found that the average price Victorian customers paid for 4,000 kWh of electricity in a year, did not vary significantly between 2017–18 and 2018–19, as shown in figure 4.2.

 _{Source: Data obtained from retailers via an information notice issued under s37 of the ESC Act 2001. Analysis includes all standard and market contracts.}

There are many offer types available in the market, but how many of these offers are customers actually on?

As at 30 June 2019, we found Victorian retailers published over 100 offers within any distribution zone, (based on the offers we found published by retailers on the Victorian Energy Compare website).

We analysed the distribution of residential customers across contract types from three of the largest electricity retailers using the data from our formal information request. Although there were customers on between 24 and 48 different types of plans for each retailer, we found that four out of every five customers were on only one of three market offers with their retailer.
 

_{Source: Data obtained from retailers via an information notice issued under s37 of the ESC Act 2001.
Analysis takes the average rate paid by customers against a typical residential electricity consumption of 4,000 kWh p.a.} 

Most customers were on electricity contracts with discounts

Based on data obtained directly from retailers, we found that 85 per cent of customers were on market contracts with discounts in 2018–19. 

Pay on time discounts feature in the market. Of the accounts with conditional discounts at 30 June 2019, three out of every four had a pay on time discount (as shown in figure 4.4). 

_{Source: Data obtained from retailers via an information notice issued under s37 of the ESC Act 2001.} 

Around one in five customers on discounted contracts did not meet the conditions for their discounts

Over 80 per cent of customers with discounted contracts met the conditions to receive their discounts (shown in figure 4.5). However, this means that around one in five customers did not meet part or all the conditions for their discount throughout the year.

 _{Source: Data obtained from retailers via an information notice issued under s37 of the ESC Act 2001.}

Not meeting discount conditions can be costly

Meeting your discount conditions may not result in a cheaper electricity bill. 

On average, the total price paid per kWh by consumers when they met all their discount conditions was almost the same as not having any discounts on offer (as shown in figure 4.6).

We found it cost Victorian customers $188 in 2018-19 and $268 in 2017-18 for not meeting part or all of the conditions to receive their discounts.

On average, we found that customers paid an additional $188 across all distribution zones in 2018–19 for not meeting discount conditions.

The additional cost for not meeting discount conditions reduced in 2018–19 compared to the previous year (as shown in figure 4.7). 

This follows a reduction in the size of discounts offered, with fewer in the higher bands of 30-40 per cent and more in the lower end with discounts of 10 and 11-20 per cent.

For our analysis, the $ per kWh prices shown are measured by the total amount paid by all customers on a type of offer, divided by the energy consumption of these customers over a 12-month period. 

Therefore, average prices are shown as a single $ per kilowatt hour figure and will not directly reflect the tariff rates of retailers’ offers (as it combines the daily supply charge and variable supply charges into a single figure). 

 

 

 

 

 

 

 

 

 

_{Source: Data obtained from retailers via an information notice issued under s37 of the ESC Act 2001} 

Electricity contracts with a fixed price can be more affordable than those without a fixed price

Fixed price market offers generally have a set price for at least 12 months and can be more affordable than non-fixed price market offers, if there are no conditional discounts attached to the plan. 

During 2018-19, when examining offers without any conditional discounts, the fixed price market offers were, on average, more affordable than non-fixed price market offers. In contrast, among the offers with conditional discounts, fixed price offers were more expensive (figure 4.8). 

On average, the lowest cost plans in 2018–19 were fixed` price market offers with no conditions on discounts attached.

Fixed priced plans can be more expensive if they have conditions attached to the price. In 2018-19 the price paid for a fixed price plan with all discount conditions met was $0.39 per kWh compared to $0.30 for non-fixed price plans with all discount conditions met. 

We also found that a higher proportion of consumers do not have discounts if they are on fixed rate plans (figure 4.9).

The price customers paid per kWh was highest for fixed-rate plans with large retailers and the lowest for fixed rate plans with medium and small retailers (figure 4.10).  

_{Source: Data obtained from retailers via an information notice issued under s37 of the ESC Act 2001.}

 _{Source: Data obtained from retailers via an information notice issued under s37 of the ESC Act 2001.}

_{Source: Data obtained from retailers by the commission via the issue of a s37 information notice. Source: Data obtained from retailers via an information notice issued under s37 of the ESC Act 2001.}