What does the VDO mean for you and finding a good electricity deal in VIC? Let’s break it down!

What is the Victorian Default Offer?

The Victorian Default Offer (VDO) is a maximum electricity price that energy providers can charge Victorians on default offers for power in their area, set by Victoria’s Essential Services Commission (ESC). The idea is to protect you against energy companies that set unfair and high costs – as was often the case for standing offers in the past.

If you’re on a VDO, it simply means you could negotiate a discount with an electricity retailer or switch providers to take advantage of a better deal.

The VDO means that even if you can’t or don’t want to compare deals with electricity providers, you’ll have access to fair electricity prices. The VDO was introduced in July 2019 and has since replaced all standing offers following the Independent and Bipartisan Review of the energy market in Victoria.

The VDO applies to both residential customers and small business customers (using less than 40 megawatt hours of electricity annually).

Why was the Victorian Default Offer introduced?

The VDO was introduced after an independent review found Victorians were paying higher electricity prices than they should. The offer falls under the Victorian Government’s Energy Fairness Plan, which strives to make electricity simple and affordable for all Victorians.

In simple terms, it was introduced to protect you – the customer – so you always have access to fairly priced electricity plans.

The Australian Energy Regulator (AER) has a similar initiative for the electricity retail markets in New South Wales, South East Queensland, South Australia and the Australian Capital Territory, called the Default Market Offer (DMO).

Victoria Price Fall

Victorian Default Offer vs Market Offers – what’s the difference?

The VDO is a standard price that Victorian energy providers charge you for electricity, without any incentives or discounts. On the other hand, market offers are generally cheaper than the VDO and are usually better value since they may offer lower rates, discounts, rewards and other perks. Of course, you won’t know if you can get a better deal on your energy bills unless you compare your options.

Here are the changes between the two, as well as standing offers:

Standing offer Victorian Default OfferMarket offers
  • No longer available for electricity (all flat tariff standing offers were moved across to VDOs from 1 July 2019, while all non-flat standard offers were moved to the VDO from 1 January 2020)
  • Didn’t offer discounts
  • Was typically more expensive than other options, such as market offers.
  • The ESC sets prices
  • More affordable than previous standing offers, but not necessarily the cheapest option available
  • Don’t offer discounts (think of it as a standard rate if you can’t or don’t want to compare options)
  • What a market offer may default to if your contract ends, and you don’t find another market offer.
  • Energy retailers set their own prices
  • You typically receive discounts and incentives that keep your electricity bill down (for a limited time)
  • There may be unconditional discounts, which means the discount doesn’t depend on you doing anything such as paying a bill on time
  • May also offer conditional discounts, which you only receive if you do something (such as pay a bill by a set date)
  • You may move to a VDO when your contract ends.

It’s important to note that because the VDO is the electricity baseline, all market offer discounts will reference against it. For example, a provider will generally list the percentage difference between their market offer and the VDO . This instantly lets you know how much better the market offer is than the VDO. Below is an example of how market offers may be advertised. Please note: This is an example only and doesn’t reflect actual prices.

VDO on energy bill example

What are the current Victorian Default Offer rates?

The VDO can only change once a year, unless it’s a special circumstance. It impacts the price you pay for power on VDO electricity plans. VDO prices were updated on 1 January 2021. However, an out-of-cycle change occurred on 1 September 2021, driven by the Australian Energy Regulator (AER) allowing Victorian distributors to change their network prices from 1 July 2021, rather than 1 January as they did in the past. The VDO was adjusted to reflect the change in network prices. The VDO prices changed again on 1 January 2022 and will apply until 30 June 2022.

The table below illustrates the VDO that applies to residential single rate and single rate with controlled load tariffs across the various Victorian distribution zones between 1 January 2022 and 30 June 2022.

Distribution ZoneDaily supply chargeUsage charge structureUsage charge per kilowatt-hour (kWh)Controlled load per kilowatt-hour (kWh)
AusNet Services$1.2600Block 1 (up to 1020 kWh during a quarter)
Block 2 (> 1020 kWh during a quarter)
$0.2649

$0.2811

$0.1834
CitiPower$1.2023Anytime$0.2171$0.1542
Jemena$1.1491Anytime$0.2307$0.1756
Powercor$1.3459Anytime$0.2235$0.1578
United Energy$1.0634Anytime$0.2242$0.1590
Source: Essential Services Commission – Victorian Default Offer price review 1 January 2022’ – Accessed 14/12/2021

The table below illustrates the VDO that applies to residential time of use tariffs across the various Victorian distribution zones between 1 January 2022 and 30 June 2022.

Distribution ZoneDaily supply chargePeak usage charge per kilowatt-hour (kWh) [9am-9pm weekdays]Off-peak usage charge per kilowatt-hour (kWh) [All other timesControlled load per kilowatt-hour (kWh)
AusNet Services$1.1587$0.3746$0.1820$0.1834
CitiPower$1.1948$0.3091$0.1696$0.1542
Jemena$1.0508$0.2870$0.1750$0.1756
Powercor$1.3301$0.3135$0.1746$0.1578
United Energy$1.0553$0.3152$0.1771$0.1590
Source: Essential Services Commission – Victorian Default Offer price review 1 January 2022’ – Accessed 14/12/2021

The table below illustrates the VDO that applies to small business single rate tariffs across the various Victorian distribution zones between 1 January 2022 and 30 June 2022. These businesses use less than 40 MWh per year.

Distribution ZoneDaily supply chargeUsage charge structureUsage charge per kilowatt-hour (kWh)
AusNet Services$1.3356Block 1 (up to 1020 kWh during a quarter)
Block 2 (> 1020 kWh during a quarter)
$0.3016
$0.3335
CitiPower$1.3876Anytime$0.2141
Jemena$1.3848Anytime$0.2457
Powercor$1.4613Anytime$0.2257
United Energy$1.1521Anytime$0.2225
Source: Essential Services Commission – Victorian Default Offer price review 1 January 2022’ – Accessed 14/12/2021

The table below illustrates the VDO that applies to small business time of use tariffs across the various Victorian distribution zones between 1 January 2022 and 30 June 2022. These businesses use less than 40 MWh per year.

Distribution ZoneDaily supply chargePeak usage charge per kilowatt-hour (kWh) [9am-9pm weekdays]Off-peak usage charge per kilowatt-hour (kWh) [All other times
AusNet Services$0.8648$0.3246$0.1701
CitiPower$1.3568$0.2702$0.1520
Jemena$1.6395$0.2849$0.1533
Powercor$1.4275$0.2894$0.1556
United Energy$1.1219$0.2832$0.1563
Source: Essential Services Commission – Victorian Default Offer price review 1 January 2022’ – Accessed 14/12/2021

 

Compare to see if better deals are available

The ESC states that the VDO usually won’t be the cheapest offer available and you’ll likely be able to find better prices by switching to a market offer.1 It should be noted that the VDO is a price cap only on standard offers. While market offers don’t have a cap, they must show the percentage discount or premium against the VDO. It’s unlikely a retailer will set prices higher than the VDO for market offers.

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We don’t have access to all of the products available in your area: we do not compare all brands in the market, or all products offered by all brands. At times certain brands or products may not be available or offered to you. From time to time we may have access to better offers that are only available over the phone. Call us to see if you are eligible. Learn more.

Is the Victorian Default Offer available to everyone?

If you’re a Victorian resident or eligible small business owner, the VDO will be available to you. Remember that when it comes to market offers, electricity providers must show the percentage discount or premium against the VDO.

From September 2020, the VDO is also the maximum price homes and eligible small businesses within embedded networks pay for electricity. You may be part of an embedded network if you:

  • reside in an apartment
  • live in a retirement village or caravan park
  • have a business within a shopping centre.

How will I know if I’m on the best electricity plan?

In Victoria, electricity providers must tell you if you’re on their best electricity plan or how much you could save by switching. This information will be displayed on your electricity bill at least every three months.

Similarly, if providers are advertising discounted market offers, they’re required to display the VDO as a reference price to help you understand exactly how much you could save and whether the deal is right for you.

Brett Mifsud, General Manager

Tips from our energy expert, Brett Mifsud

    1. Review your current electricity offer to see if you’re paying the lowest electricity price. If you haven’t reviewed your offer in more than a year, there’s a good chance you could save by comparing your options. Remember: Victorian Default Offer prices aren’t usually the cheapest.
    2. Compare your options. Services like our electricity comparison tool allow you to compare your current plan against an array of others on the market. As well as prices, you can see if any discounts are on offer and if you want to take advantage of them.
    3. Switch offers based on your findings. If there’s room to save money, what are you waiting for? If you find an option using our service, we can help you switch right here. When switching electricity providers, we’ll transfer your existing account from your current provider to your new one, without any disruption to your electricity. As of 1 October 2021, electricity transfers no longer take up to 90 days as they did in the past. Instead, transfers can now occur within two business days in the future or retrospectively up to 65 days in the past, subject to eligibility. Future transfers may be based on an estimated read.

Sources

Essential Services Commission – ‘Increased costs for retailers mean a small rise in default electricity price’ – Accessed 18/10/2021
Essential Services Commission – ‘Victorian Default Offer amendment to price determination 2021 – Final Decision’ – Accessed 18/10/2021

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