Annual Report 2019-20

The Victorian default offer provides a simple, trusted and reasonably priced electricity option for consumers. We set the default offer each year after assessing the efficient costs of providing retail electricity services to Victorians.

Performance milestones

In November 2019, we took a major step by making our first determination to set Victorian default offer prices for 2020.

From 1 January 2020, the default offer saw households paying $200-300 less and businesses saving $1,000-1,600 than they were before the offer was introduced.

Around 124,000 residential and 40,000 small business customers are now benefiting from the pricing protections offered under the Victorian default offer.

We have proposed that the default offer prices should be the maximum that embedded network customers can be charged. This extends the benefits of the Victorian default offer to a large set of Victorian customers who find it difficult to engage in the competitive market.

By reviewing the default offer prices, we make sure it continues to provide Victorians access to a fair electricity deal – even if they are unable or unwilling to engage in the retail market.

The default offer applies to all standing offers, which are usually in place where a customer has not taken up a market offer by negotiating a discount or switching providers.

In early 2020 we developed an approach for embedded networks to have the default offer set as their maximum electricity price.

Building on existing consumer protections

2019 – our first price determination

In 2019 we completed our first determination of the default offer prices. It built on the existing protections in the default offer by extending them to all consumers on standing offers. Before this the default offer only applied to consumers on standing offers with flat tariffs.

Reaching out to our stakeholders

Before making our final decision, we hosted a public forum and published a consultation paper and draft decision to give stakeholders an opportunity to share their views. To get better information on the cost of providing electricity, we also collected data from all electricity retailers licensed in Victoria.

Future of the framework

We set the default offer each year after assessing the efficient costs retailers need to recover to provide electricity to Victorian customers.

We will make our determination by 25 November 2020 for the default prices applied from 1 January 2021. Before we make our determination, we will complete another review and consultation process on default offer prices.

By reviewing the default offer prices we will make sure it continues to provide Victorian consumers access to a fair electricity deal even if they are unable or unwilling to engage in the retail market.

The default offer and embedded networks

We have determined that the Victorian default offer be the new maximum price for electricity supplied to customers in embedded networks (such as apartment buildings and retirement villages).

This is the first time these prices will be set by a regulator and embedded network customers could see significant savings by lowering the current maximum to the Victorian default offer. Our final decision was made in July 2020.

Our year in review

Last year we started our first review of the maximum prices customers in embedded networks can be charged (including apartment buildings, retirement villages and caravan parks). These customers can rarely access competitive electricity deals, and sellers can charge up to the maximum – which is currently set by expensive historical standing offer prices set by retailers. We asked Victorian consumers and businesses whether the Victorian default offer would be an appropriate maximum price for embedded network customers in a consultation paper and draft decision. There was broad support from customers and electricity providers for our proposal.