What does the VDO mean for you and finding a good electricity deal in VIC? Let’s break it down!
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).
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).
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 Offer | Market offers |
|
|
|
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.
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 Zone | Daily supply charge | Usage charge structure | Usage charge per kilowatt-hour (kWh) | Controlled load per kilowatt-hour (kWh) |
| AusNet Services | $1.2600 | Block 1 (up to 1020 kWh during a quarter) Block 2 (> 1020 kWh during a quarter) | $0.2649 $0.2811 | $0.1834 |
| CitiPower | $1.2023 | Anytime | $0.2171 | $0.1542 |
| Jemena | $1.1491 | Anytime | $0.2307 | $0.1756 |
| Powercor | $1.3459 | Anytime | $0.2235 | $0.1578 |
| United Energy | $1.0634 | Anytime | $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 Zone | Daily supply charge | Peak usage charge per kilowatt-hour (kWh) [9am-9pm weekdays] | Off-peak usage charge per kilowatt-hour (kWh) [All other times | Controlled 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 Zone | Daily supply charge | Usage charge structure | Usage charge per kilowatt-hour (kWh) |
| AusNet Services | $1.3356 | Block 1 (up to 1020 kWh during a quarter) Block 2 (> 1020 kWh during a quarter) | $0.3016 $0.3335 |
| CitiPower | $1.3876 | Anytime | $0.2141 |
| Jemena | $1.3848 | Anytime | $0.2457 |
| Powercor | $1.4613 | Anytime | $0.2257 |
| United Energy | $1.1521 | Anytime | $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 Zone | Daily supply charge | Peak 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 | |||
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.
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.
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:
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.
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
