Victorian Default Offer launched on 1 July 2019
There are many changes happening in energy in Victoria from 1 July onwards, such as the Victorian Default Offer, best offer messaging and solar feed-in tariffs changes.
We’ve outlined these changes below but it’s worth noting that there could be more to come. We’ll keep you updated.
Victorian Default Offer
From 1 July 2019, energy companies are required to make a Victorian Default Offer (or VDO) available to Victorian home and small business customers on a certain rate type.
These rate types will move to Victorian Default Offer rates from 1 July 2019:
|Residential electricity customers||Flat and controlled load rates|
|Business electricity customers (uses less than 40 MWh per year)||Flat rate|
The Victorian Default Offer is a regulated price for electricity that will replace standing offer tariffs advertised by energy companies. The Victorian Default Offer price is set annually for each electricity distribution zone based on an average customer.
It will also serve as a comparison for discounted electricity offers. For example, if an energy company is offering a ten per cent discount, that discount must be compared to the Victorian Default Offer.
The Victorian Government introduced the Victorian Default Offer to make it easier for consumers and businesses to compare energy plans across different retailers.
It’s intended as a safety net for residential and small business customers who don’t have the time or access to compare market offers provided by electricity retailers. It also ensures that customers who can’t or don’t want to engage with their energy retailer will pay lower energy costs.
The reference price is the average annual electricity cost for a Victorian household or small business, based on the Victorian Default Offer rates for the relevant electricity distribution zone. This reference price is used to compare an energy retailer’s advertised offer.
The reference price will make it easier for consumers to make ‘apples with apples’ comparisons between different energy retailer offers for electricity where discounts are included.
The reference price has been calculated for each electricity zone based on the average usage.
Residential flat tariff
Residential flat tariff
with controlled load
Usage is kWh per year and all prices include GST.
There are three components to comparing a reference price.
- The estimated annual electricity cost for EnergyAustralia’s offer for an average household in a distribution zone
- The annual Victorian Default Offer cost for an average household in the distribution zone (this is the reference price)
- The difference between the annual cost of our offer against the annual cost of the Victorian Default Offer (that is, the reference price), shown in either dollars or as a percentage difference.
For example, here’s a Victorian electricity offer in the CitiPower distribution zone:
Estimated annual electricity cost for an average household in CitiPower, based on a residential flat rate.
|EnergyAustralia’s plan offer||$1,240|
|Reference price (annual VDO cost)||$1,334|
This means EnergyAustralia’s offer is 7% less than the reference price for annual electricity usage for an average household in the Citipower distribution zone.
Electricity plans are now easy to compare – just look at the percentage difference from the reference price. The bigger the discount off the reference price, the better the deal for you.
Your energy distributor is the company responsible for the poles, wires and gas pipes in your area. You’ll find the name of your distributor at the top right hand side of your energy bill.
There are five distribution zones impacted by the Victorian Default Offer across Victoria.
CitiPower owns and manages 157 square kilometres of electricity poles and wires in the network. It provides power for more than 330,000 customers in Melbourne’s CBD and inner suburbs.
Powercor manages more than half a million poles and over 88,000 kilometres of power lines, providing electricity for nearly 820,000 homes and businesses in central and western Victoria, as well as Melbourne’s western suburbs.
Jemena owns the poles and wires powering over 343,000 homes and businesses in Melbourne’s inner north-west.
United Energy distributes electricity to more than 660,000 homes and businesses across east and south east Melbourne and the Mornington Peninsula.
AusNet Services looks after the poles and wires for 740,000 homes and businesses in Melbourne's north and east and across all of eastern and north-eastern Victoria.
It’s a tariff where you’re charged the same rate for electricity throughout the day and night. There is no distinction made between peak and off-peak periods like time of use tariffs.
A flat rate tariff is usually lower than peak but higher than off peak and shoulder rates.
What is a time of use tariff?
With time of use tariffs, different usage rates are charged for the electricity you use at different times: off peak, shoulder and peak.
- Off peak – charged when the electricity network has low usage, such as overnight.
- Shoulder – a usage rate that sits between peak and controlled load times. Shoulder rates are usually a bit cheaper than peak rates and are available in most states. For example, shoulder times are 7.00am to 3.00pm and 9.00pm to 10.00pm on weekdays, as well as 7.00am to 10.00pm on weekends. These times may differ between states.
- Peak - charged when the electricity network has high usage, such as in the evening or on weekdays.
Controlled load electricity refers to electricity being used by a stand-alone item, like an electric hot water service, electric slab heating and irrigation pumps. Controlled loads are recorded by a separate meter and can be billed as an off-peak rate.
Our Basic Home or Basic Business plan is a standing offer that has no discounts. It applies to a customer who does not actively choose an energy plan with an energy company.
When someone moves into a house and the electricity or gas is already connected, any consumption is charged at the standing offer rates until the resident chooses another energy plan.
If you’re on a Basic Home electricity plan with a flat or controlled load rate or on a Basic Business electricity plan with a flat rate, your standing offer rate will automatically be changed to reflect the Victorian Default Offer rates for your area from 1 July 2019.
If you’re on a Basic Home or Basic Business plan with time of use rates, the Victorian Default Offer won’t apply to this rate type and you’ll stay on the current standing offer rate.
The Victorian Default Offer rates will be set by the Essential Services Commission (ESC) in Victoria. The ESC will review the reference price every year from 1 January 2020 onwards.
The Victorian Default Offer will affect everyone differently. If you’re on a Basic Home electricity plan with flat or controlled load rate or on a Basic Business electricity plan with a flat rate, your price will automatically be changed to reflect the Victorian Default Offer from 1 July 2019.
We’ll have contacted you to let you know how you are affected by the Victorian Default Offer.
From 1 July 2019, all electricity Victorian households and small businesses will be able to access the Victorian Default Offer, except for customers in embedded networks.
The Energy Services Commission doesn’t set Victorian Default Offer prices for all tariff types. If you’re on one of these non-Victorian Default Offer tariffs, you may need to change your tariff type to access the Victorian Default Offer. However, our advertised plans are better than Victorian Default Offer prices and you won’t need to change your tariff type either.
This is a type of electricity infrastructure generally managed by the building owner. A person living in an apartment complex, retirement home, caravan park or tenant in a shopping centre may be receiving their electricity via an embedded network.
Pricing is more complicated for embedded network customers. You usually get your electricity from exempt retailers who are not required to offer standing offers rates to customers.
The Victorian Government has decided to defer the application of the Victorian Default Offer as a maximum price for embedded networks, as it needs more time to work out what would be the right maximum price.
If you’re on a standing offer, on the tariff types that will change to Victorian Default Offer rates, you don’t have to do anything. We’ll have contacted you to let you know if your plan rates change to Victorian Default Offer rates.
If you're not on a standing offer and you want to access the Victorian Default Offer, you'll need to sign up to Basic Home or Basic Business plan on the following rate types:
|Residential electricity customers||Flat and controlled load rates|
|Business electricity customers||Flat rate|
Standing offer rates and Victorian Default Offer rates are not our best priced plans.
No, the Victorian Default Offer doesn’t apply to gas.
Your 15% discount that you have been receiving since January 2019 won’t apply after 1 July 2019. However, the good news is that you’ll be paying less than what you are now, as we have lowered your rates.
In New South Wales, South Australia and south east Queensland, it’s called the Default Market Offer. Find out more about these changes.
- See our home and business plans to check that you’re on the best plan for your needs.
- We have a range to suit everyone, whether you’re looking for great rates, flexibility or price certainty.
How do I find which plan I’m on?
- If you’re not sure what plan you’re on now, go to ‘Your electricity usage and service calculation’ section on page 3 of your home or business bill.
Solar Feed-in Tariffs
You would have recently received a notice from us telling you that your feed-in tariff has changed. This was our mistake, so please ignore it. The premium feed-in tariff you currently receive will remain the same until 2024. We’re sorry for any inconvenience this may have caused.
Best offer message
Between 1 July and 1 October 2019, all energy retailers will start to include a best offer message on the front of their bills. This message will inform you whether or not you’re on the best priced advertised plan available from us for your needs. The message you get will be based on your energy usage over the past 12 months or an estimate if we don’t have 12 months usage and whether or not you can save more than $22 (including GST) a year.
It was introduced to help you understand if you’re on the best priced advertised plan or not. All energy retailers are required to have these messages on their bills after 1 July 2019.
If we have another plan that could save you more than $22 a year (including GST) then we’ll tell you. If not, we’ll let you know that you’re on our best priced advertised plan available for your needs.
This mean you’re on our best priced advertised plan, and we don’t have an alternative that can save you more than $22 a year.
Yes. The message will either be that you're on the best priced advertised plan with us, or that you could save an estimate of more than $22 (including GST) a year on one of our other best priced advertised plans.
If your circumstances change, you can still contact us to discuss other plan options.
The best offer message is calculated at a point in time, based on the plans we have available and an estimated usage information we have for you. Our available plans and your usage can both change.
Feel free to contact us and we can chat about your energy account needs.
We have now included a statement on your bill to remind you of this. It can be found here.
There will be no change to how you include the GST on your energy purchases in your BAS.