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The Victorian Default Offer has changed. Here’s what you need to know

5 min read
1 Sep 2021
customers reading energy bill

From 1 September, Victorian residential electricity customers on the Victorian Default Offer (VDO) will see an out-of-cycle adjustment to the price they pay for electricity.

The Essential Services Commission (ESC) previously announced that residential customers on a flat VDO tariff could see their electricity prices increase by as much as $6 a month from 1 September to 31 December.1 Meanwhile, most small business electricity customers on a flat VDO tariff will notice increases of between $12 and $32 on their electricity bills per month for the same period.1 These price changes have now kicked in.

The VDO is the maximum price customers will pay for electricity if they’re not on a market contract –  where they’ve taken advantage of other deals available or negotiated discounts with an electricity provider. The VDO is intended to be a fair price that electricity retailers can charge customers for electricity, but market offers tend to be better for customers as they’re cheaper and offer perks, rewards and incentives.

What are the new VDO rates?

The exact price change VDO electricity customers will see on their bills will vary between distribution zones. See the price changes for specific distribution zones below.

Residential customers on the VDO

Distribution Zone2021 VDO monthly bill priceUpdated VDO monthly bill price (from Sep)Difference
AusNet Services$126$130+$4
Citipower$106$112+$6
Jemena$111$116+$5
Powercor$114$119+$5
United Energy$110$113+$3
Source: Essential Services Commission – ‘Victorian Default Offer amendment to price determination 2021 – Final Decision (P26)’ – Accessed 01/09/2021|
NB: The figures above are based on the estimated monthly bill based on the 2021 VDO prices outlined by the ESC. These are the prices for an average residential user in these distribution zones, assuming an annual usage of 4,000kWh, with the monthly usage assumed to be spread uniformly across the year.

Small business customers on the VDO

Distribution Zone2021 VDO monthly bill priceUpdated VDO monthly bill price (from Sep)Difference
AusNet Services$574$602+$28
Citipower$411$423+$12
Jemena$438$470+$32
Powercor$425$441+$16
United Energy$439$433-$6
Source: Essential Services Commission – ‘Victorian Default Offer amendment to price determination 2021 – Final Decision (P26)’ – Accessed 01/09/2021
NB: The figures above are based on the estimated monthly bill based on the 2021 VDO prices outlined by the ESC. These are the prices for an average small business user in these distribution zones, assuming an annual usage of 20,000kWh, with the monthly usage assumed to be spread uniformly across the year.

Why are these VDO price changes significant?

In the past, VDO prices were adjusted annually on January 1, in line with any changes that distribution networks made to network charges. However, the Australian Energy Regulator (AER) recently approved a proposal to allow Victorian electricity distribution networks to operate on a financial year basis rather than a calendar year basis and adjust network charges accordingly.2

Network charges influence the VDO price and because they were adjusted on 1 July in line with the new financial year, it has also impacted the VDO price for the remainder of 2021. Customers can expect the VDO prices for 2022 to be released by the ESC in November and take effect from 1 January, 2022.3

The unexpected mid-year change could also influence market offers, as retailers have been known to adjust the pricing of these contracts when the default price is adjusted. The VDO is a baseline pricing point that retailers use as a reference for the discounts they set on their contracts.

It’s important to note that while most customers on the VDO will pay more per month for the rest of 2021, households will still pay an estimated $140 less over the whole year when compared to 2020.4

Don’t pay more than you need to for electricity

If you’re currently on a VDO contract or it’s been a while since you’ve compared electricity plans, there’s a chance you could be paying more than you need to for electricity.

It’s a good idea to regularly compare your current contract against others on the market or see what other plans are available to ensure you’re not paying more than you need to for the same electricity supply.

Our energy comparison tool allows you to compare a variety of providers, plans and features for free. You may be able to take advantage of a fixed rate electricity plan, which will lock in prices and give you clarity around what you’ll pay for electricity for the foreseeable future.

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

  1. Essential Services Commission – ‘Victorian Default Offer amendment to price determination 2021 – Final Decision’ – Accessed 01/09/2021
  2. Australian Energy Regulator – ‘AER approves 2021-22 network tariffs for Victorian electricity customers’ – Accessed 01/09/2021
  3. Essential Services Commission – ‘Victorian Default Offer price review 2022’ – Accessed 01/09/2021
  4. Essential Services Commission – ‘Increased costs for retailers mean a small rise in default electricity price’ – Accessed 01/09/2021

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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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