On November 25, the Victorian Default Offer rates for 2021 were announced – but what does this mean for you and finding a good electricity deal? Let’s break it down!

What is the Victorian Default Offer?

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

If you’re on a standing offer, it simply means you haven’t negotiated a discount with an electricity provider or switched 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 replaced all standing offers following the Independent and Bipartisan Review of the energy market in Victoria.

Why was the Victorian Default Offer Introduced?

The VDO was introduced after an independent review found Victorians were paying higher prices for electricity than they should be. 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 a fair electricity plan.

Victoria Price Fall

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

It’s best to think of the VDO as a fair, but standard, price that providers charge you for electricity, but without any incentives or discounts. Market offers, on the other hand, are generally cheaper than the VDO and are usually better value since they offer other rewards and perks.

Of course, you won’t know if you can get a better deal 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 standing offers were moved across to VDOs in July 2019)
  • 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 will default to if your contract ends and you don’t find another market offer
  • Energy providers 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 also important to note that because the VDO is the electricity baseline, all market offer discounts will reference against it. For example, a provider will list the percentage under the VDO their market offer is. This instantly lets you know how much better the market offer is than the VDO.

VDO on energy bill example

What are the Victorian Default Offer 2021 rates?

The VDO changes every year, with new tariffs determining the price you’ll pay from 1 January 2021 on VDO electricity plans. According to the ESC, 2021’s VDO fell by an average of 10% ($159) for households and 14% ($916) for small businesses from the 2020 rate.2

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 from 1 January 2021.

Distribution ZoneSupply charge per dayUsage charge structureUsage charge per kilowatt-hour (kWh)Controlled load per kilowatt-hour (kWh)
AusNet Services$1.1643Block 1 (up to 1020kWh used in a quarterly period)
Block 2 (balance of usage in a quarterly period)
$0.2703
$0.2882
$0.1924
CitiPower$1.1330Anytime$0.2140$0.1629
Jemena$1.0675Anytime$0.2344$0.1819
Powercor$1.2918Anytime$0.2240$0.1704
United Energy$0.9824Anytime$0.2400$0.1707
Source: Essential Services Commission – ‘Victorian Default Offer 2021 Final Decision’ – Accessed 27/11/2020

The table below illustrates the VDO that applies to small business single rate tariffs across the various Victorian distribution zones from 1 January, 2021. Read more.

Distribution ZoneSupply charge per dayUsage charge structureUsage charge per kilowatt-hour (kWh)
AusNet Services$1.1643Block 1 (up to 1020kWh used in a quarterly period)
Block 2 (balance of usage in a quarterly period)
$0.2955
$0.3302
CitiPower$1.3567Anytime$0.2218
Jemena$1.2264Anytime$0.2405
Powercor$1.4197Anytime$0.2288
United Energy$1.0463Anytime$0.2444
Source: Essential Services Commission – ‘Victorian Default Offer 2021 Final Decision’ – Accessed 27/11/2020

Should I switch to or remain on the Victorian Default Offer?

As everyone’s circumstances are different, only you’ll be able to know whether the VDO is the right option for you. However, 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

Here’s what you can do to find out.

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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.

Can everyone access the Victorian Default Offer?

If you’re a Victorian resident or small business owner, you can opt for the VDO or request the current rate so you can determine whether you’re getting the best bang for your buck on your electricity plan. Electricity providers must make the offer available if you request it, but they can also sell plans that differ from the VDO (known as market offers).

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

How will I know if the Victorian Default Offer is best for me?

In Victoria, electricity providers must let you know 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 once 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.

Sources

1. Essential Services Commission (15 September 2020) – ‘Victorian Default Offer 2021’ – Accessed 23/11/2020
2. Essential Services Commission (27 November 2020) – ‘Media release: Victorians to save on default electricity price’ – Accessed 27/11/2020

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