Share and Follow
The Essential Services Commission (ESC) has released its draft proposal for the Victorian default electricity offer for the upcoming financial year, projecting an average decrease of 3% across the state’s five electricity networks.
If approved, this proposal could lead to an average annual reduction of $46 in electricity costs for Victorian households, while small businesses might enjoy savings of $172.
Among the networks, Powercor customers would experience the most significant decrease, with a $48 reduction in their yearly bills, whereas those on the United Energy network would see the smallest decrease of $43.
Gerard Brody, chair and commissioner of the ESC, stated, “This draft decision has been crafted using the best available data and aims to serve the long-term interests of Victorian consumers by considering price, quality, and the reliability of essential services.”
The final decision on price benchmarks will be revealed on May 24, with the new rates set to take effect in July.
The price drop is being driven by a decrease in the amount energy companies have to pay to support state and federal renewable energy programs.
“Meeting government renewable targets has become cheaper for the retailers and the regulator wants to pass these savings on to households,” Canstar data insights director Sally Tindall said.
Premier Jacinta Allan said the proposed price drop would put “downward pressure on energy bills across the board”.
“It is a modest decrease that is being proposed but it’s still a welcome one at a time when there are so many other pressures on household budgets, where households are watching every dollar closely,” she said.
But Tindall warned Victorians not to get their hopes up too high.
“Canstar analysis of past draft decisions shows the final price can sometimes creep up after negotiations with market participants,” she said.
Last year, the final benchmark prices were up to $25 higher than the draft figures for four of the five networks, Canstar analysis shows.
In addition to the default offer, other new rules coming into effect on July 1 are being hailed as a “huge step forward” for Victorians’ right to a fair deal.
From July, energy retailers must make sure customers who have been on the same plan for more than four years are paying a “reasonable price”.
If not, the provider must move them to a cheaper plan.
“The new rule coming in from July 2026, which forces energy retailers to move customers on older plans to cheaper options, is a huge step forward,” Tindall said.
“Penalising loyalty is a concept that has become entrenched in the way so many bills operate.
“This rule, and the other reforms coming down the line designed to help people in hardship, won’t fix everything, but they will make the system fairer.”
The Victorian default offer acts as a safety net against high prices for Victorians who don’t shop around or are on an embedded network.
Almost 17 per cent of households and 21 per cent of small businesses are currently on the VDO.
“The default offer gives people confidence that they’ll continue to receive a fair deal without having to test the market each year,” Brody said.
“If you’re someone who is willing and able to review your electricity plan each year, you’ll be able to find cheaper deals.
“But if you don’t want to be swapping deals each year, the default offer is a good, fair option.”
NEVER MISS A STORY: Get your breaking news and exclusive stories first by following us across all platforms.