Victorian Energy Market report 2018-19

Standard contract offers prices increased in 2018–19

We reviewed the published prices of residential standard contracts on 30 June 2019 and found an average increase of 3 per cent for electricity and 1 per cent for gas compared to 30 June 2018. 

For electricity and gas, this was a significantly smaller increase than the year before (prices increased by 16 per cent on 30 June 2018). 

From 1 July 2019 the Victorian Default Offer (VDO) came into effect and customers on a flat standing offer received the VDO price. This would save a typical customer around $310 to $450 compared to 2018–19 standing offer prices, depending on the distribution zone.

_{Figures denote the average number of standard contract customers across a given year}

Number of customers on standard contracts continue to fall

The number of energy customers on standard contracts with their retailer has been steadily declining up to June 2019 (figure 4.11). 

There is now only half the number of electricity and gas customers on standard contracts compared to five years ago. If you have not changed your retailer in the past, you are likely to have a standard contract. 

Only one in 20 electricity customers were on standard contracts with their retailer in 2018–19. There was a total of 129,245 residential customers on standard contracts for electricity. Around one in 15 gas customers were on standard contracts in 2017–18. There were 127,508 residential customers on standard contracts for gas.

Almost all energy customers on standard contracts buy their energy from AGL, EnergyAustralia or Origin Energy (92-93 per cent of standard contract customers), as shown in figure 4.12 and 4.13. Origin Energy had the most standard contract customers, at one in every nine of its electricity customers. Simply Energy, a large retailer with more than 240,000 residential electricity customers, had only one standard contract customer for every 200 of its electricity customers.
 

 

 

 

 

 

 

 

 

 

 

 

 

 

Price of residential market offers in 2018–19 were largely unchanged compared to 2017–18

The average price of published residential discounted electricity and gas market offers was, on average unchanged in 2018–19, if all the conditions of these offers were met, as shown in figure 4.15. 

If discount conditions were not fully met, average prices decreased by around three and one per cent for electricity and gas respectively. No discount market offer prices increased by two per cent for electricity and was unchanged for gas.

For small business, the average discounted electricity offer price increased by three per cent and decreased by 10 per cent for gas offers since 2017–18, if all conditions were met. If these conditions were not met, prices decreased by 12 per cent in gas and were unchanged in electricity.

When we analyse discounts, we include both conditional and unconditional discounted offers. This has minimal impact on the average price and the additional cost of not receiving the discount.

Table 4.1 Estimated annual residential energy bills based on published offers since June 2015

		Electricity						Gas
	30 June 2015		30 June 2016	30 June 2017	30 June 2018	30 June 2019	30 June 2015	30 June 2016	30 June 2017	30 June 2018	30 June 2019
Standard contracts	$1,522		$1,514	$1,582	$1,833	$1,881	$1,316	$1,384	$1,530	$1,768	$1,792
(% change from previous year)			-1%	­ 5%	­ 16%	­ 3%		­ 5%	­ 11%	­ 16%	­ 1%
Unconditional market contracts	$1,345		$1,437	$1,388	$1,359	$1,395	$1,207	$1,316	$1,422	$1,470	$1,490
(% change from previous year)			­ 7%	-3%	-2%	­3%		­ 9%	­ 8%	­ 3%	­ 1%
Discounted market contracts (with conditions met)	$1,253		$1,251	$1,277	$1,366	$1,373	$1,179	$1,221	$1,375	$1,451	$1,453
(% change from previous year)			­ 0%	­ 2%	­ 7%	0%		­ 4%	­ 13%	­ 6%	0%
Discounted market contracts (without conditions met)	$1,465		$1,521	$1,622	$1,805	$1,759	$1,329	$1,401	$1,553	$1,745	$1,735
(% change from previous year)			­ 4%	­ 7%	­ 11%	-3%		­ 5%	­ 11%	­ 12%	-1%

_{Estimated residential annual bills assume yearly electricity consumption of 4,000 kWh and yearly gas consumption of 54.4 GJ.  2016–17 to 2018–19 prices are based on published flat and multi-flat offers, excluding time-varying rates, controlled loads and standard contracts applying to fewer than 200 customers. Offers are based on those available on 30 June each financial year. Figures include GST.}

Table 4.2 Estimated annual small business energy bills based on published offers since June 2016

		Electricity			Gas
	30 June 2017		30 June 2018	30 June 2019	30 June 2017	30 June 2018	30 June 2019
Standard contracts	$4,346		$5,272	$5,126	$21,826	$24,836	$24,393
(% change from previous year)			­ 21%	-3%		­ 14%	-2%
Unconditional market contracts	$3,626		$3,612	$3,909	$16,947	$18,361	$17,548
(% change from previous year)			0%	­ 8%		­ 8%	-4%
Discounted market contracts (with conditions met)	$3,207		$3,789	$3,917	$16,968	$20,281	$18,181
(% change from previous year)			­ 18%	­ 3%		­ 20%	-10%
Discounted market contracts (without conditions met)	$4,223		$5,011	$5,015	$20,421	$24,883	$21,810
(% change from previous year)			­ 19%	0%		­ 22%	-12%

_{Estimated small business annual bills assume yearly electricity consumption of 12,000 kWh and yearly gas consumption of 500 GJ. 2016–17 to 2018–19 prices are based on published flat and multi-flat offers, excluding time-varying rates, controlled loads. Offers are based on those available on 30 June each financial year. Figures include GST.}