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VDO electricity customers could see bills slashed in 2022

3 min read
8 Sep 2021
customers notice vdo has increased on electricity bill

Victorian residential and small business electricity customers on the Victorian Default Offer (VDO) could see their electricity bills slashed in 2022, according to a proposal by the Essential Services Commission (ESC).

In a draft decision released by Victoria’s energy regulator, residential customers on the VDO could see their annual bill slashed by an average of 5% and small businesses by an average of 7%.1

The proposal comes just a week after residential and small business VDO customers saw an out-of-cycle adjustment to electricity prices, with most monthly bills increasing for the remainder of 2021.

While the VDO is a fair price that electricity retailers can charge, customers are usually better off on market offers because perks, rewards and other incentives can help keep electricity bills down.

How much could VDO customers save if the proposal passes?

Across all five distribution zones in Victoria –  which includes AusNet Services, Citipower, Jemena, Powercor and United Energy – the average representative residential bill will fall from $1,412 to $1,338.2

Meanwhile, the average representative small business bill will be reduced to $5,314 from $5,686.2

Of course, these are just estimates, and actual savings will vary based on individual circumstances and usage.

Average representative residential bill (2021)Average representative residential bill (2022 draft)Difference
$1,412$1,338-$74
Average representative small business bill (2021)Average representative small business bill (2022 draft)Difference
$5,686$5,314-$372

Source: Essential Services Commission – ‘Victorian Default Offer from 1 January 2022 Draft decision Page 3/4’ – Accessed 07/09/2021

Why does the ESC believe VDO prices will fall in 2022?

The proposed decrease in pricing to the VDO is the result of lower electricity supply costs, according to ESC pricing director Marcus Crudden.

“Our analysis shows the cost of providing electricity to customers has fallen since we last set the default offer, most notably wholesale costs,” Mr Crudden said.1

“These savings are reflected in the draft decision.”

At present, around 200,000 Victorian households and 50,000 small businesses are on the VDO, reflecting 7% of the Victorian residential electricity market and 15% of its small business market.1

Customers can look for better offers than the VDO

While those on the default offer might welcome lower prices, Mr Crudden said many of these customers could save on their electricity bills by taking advantage of other offers on the market.

“There are many electricity offers available that are lower than the default offer, so we encourage customers to contact their retailer to check if they are on their best deal,” he said.1

Customers can also compare their current plan against others available. Compare the Market has a free energy comparison tool that allows customers to compare electricity plans and features from a variety of providers.

What are the next steps?

The ESC is currently seeking feedback on its draft decision paper, with comments and formal submissions encouraged to be made via the Engage Victoria website.

The commission will also hold an online public forum on the draft decision on 23 September 2021, before submissions officially close on 8 October.

The final decision will be announced on 25 November and will outline the VDO prices customers will pay between 1 January 2022 and 30 June 2022.3

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.

Sources

  • Essential Services Commission – ‘Victorians could save on default electricity offer price’ – Accessed 07/09/2021
  • Essential Services Commission – ‘Victorian Default Offer from 1 January 2022 Draft decision’ – Accessed 07/09/2021
  • Essential Services Commission – ‘Victorian Default Offer price review 2022’ – Accessed 07/09/2022

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avatar of author: Phillip Portman

Written by Phillip Portman

When he’s not busy writing, Phillip can usually be found at the movies, riding rollercoasters at theme parks, hanging out with his cockatiel Tiki, or talking about everything pop culture. He has a Bachelor of Arts in Communication and Journalism and has previously written about health, entertainment, and lifestyle for various publications. Phillip loves to help others and hopes that people learn something new from his articles.

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