Victorian Energy Market report 2018-19

This edition of the Victorian Energy Market Report looks into the performance of the market when it comes to the retail energy prices customers are paying, the level of service from energy businesses, and the experience of customers facing or anticipating payment difficulty.

Energy prices stabilised in 2018–19

For the first time, we used our statutory data collection powers and found the average yearly cost of electricity remained relatively stable over the past year. 

An average household (using 4,000 kWh) paid $1,298 in 2017–18 and $1,284 in 2018–19 for electricity. 

We found that while 84 per cent of residential customers were on plans that offered conditional discounts, nearly one fifth (18 per cent) of these did not meet the conditions necessary. 

This added on average, an extra $188 to their annual bill. 
 
Among other factors, these findings continue to highlight the need for making retail contracts clearer and fairer for customers from July 2020.

Energy offers are becoming clearer

We continued to review energy offers published by retailers on 30 June 2019. 

We noticed that retailers were offering fewer conditional discounted electricity market offers, and the discounts on offer were smaller. 

Despite this, the average price of published discounted offers, when conditions were met, was unchanged. 

This was a welcome response in the lead-up to new reforms which commenced on 1 July 2019. 

This included Victorian Default Offer, a simple and trusted price for electricity, and new ‘best offer messages requiring retailers to tell you if you’re on their best deal for you.

Greater transparency in how energy offers are advertised and providing clear advice to customers before they sign up to an energy deal have also been embedded in new energy rules.

More customers getting help

Since the introduction of new entitlements for energy customers facing or anticipating payment difficulty, there has been an increase in customers receiving assistance under the new framework.

From 1 January 2019, the number of electricity customers being offered help rose from around 48,500 to over 64,500. 

At the same time, we have seen a marked decrease in customers being disconnected for not paying energy bills. 

Disconnections are 34 per cent lower than in 2017-18 and almost 22,000 fewer disconnections than the highest levels recorded in 2013-14. 

These are a positive sign that more customers are getting the help they are entitled to earlier to ensure disconnection is only ever a last resort. 

We are concerned however, that over half of customers disconnected since 1 January are not getting the assistance they’re entitled to. We are following up on this data and will report further on this in the new year.

We are still in the early stages of the framework which has been in place for less than a year. 

We are speaking directly to customers and their advocates to find out how regulatory reforms are affecting the customer experience. 

While we have seen some positive signs, this is not consistent across the market, or within some businesses. 

Every customer is different, and it is important for us to understand the varied ways customers interact with their energy retailer.

To do this, we will continue listening to customers throughout 2019–20 about their experiences when seeking support in the energy market.

Restoring customer confidence and trust in the market

We are holding businesses to account with the aim of restoring confidence and trust in the market. 

In 2018–19, we issued $390,000 in penalty notices to energy retailers and distributors for failing to maintain customer protections. 

We had a concerted focus on compliance throughout the year, extending our audit program of distributors and retailers.

We resolved 23 wrongful disconnection disputes referred to us by the Energy and Water Ombudsman (Victoria) resulting in over $280,000 compensation being paid to affected customers. 

We supported new entrants into the market by issuing 23 new energy licences including 12 new generators comprised of five solar farms, six wind farms and one landfill gas generator.

This report is designed to give the reader real insight about what is happening in the market, from a customer perspective.

After exercising our data collection powers for the first time, we have been able to present data direct from retailers about what customers are paying for their energy. 

This is a real step forward for transparency about what is happening in the market. 

We will take another step forward over the next year as we develop a framework for assessing the competitiveness and efficiency of the market. 

The framework is all about helping the Victorian energy retail market deliver benefits to consumers by providing value for money for energy prices and great customer service.

I look forward to continuing to deliver those benefits to you, the customers, over the next year. 

Kate Symons
Commissioner and Chairperson