KEY POINTS
- The VDO is a price set by the regulator that applies to Victorians on standing offer plans and acts as a reference for retailers when setting their plans’ prices.
- The VDO ensures that the Victorian energy market is easy to navigate and that customers aren’t overpaying for electricity.
- However, the VDO doesn’t guarantee the cheapest electricity price — we recommend actively comparing electricity plans in Victoria.
In this guide, Canstar Blue will explain how the Victorian Default Offer affects electricity billing and how you can make it work for you.
On this page:
- What is the Victorian Default Offer?
- How does the Victorian Default Offer work?
- Electricity plans cheaper than the Victorian Default Offer
- Why was the Victorian Default Offer introduced?
- What are the pros and cons of the VDO?
- How much does the Victorian Default Offer cost?
- What is the ‘two-period time of use VDO’?
- How do I know if I’m on the VDO?
- How to find a great electricity deal in Victoria
What is the Victorian Default Offer?
The Victorian Default Offer (VDO) safeguards customers in Victoria who are on expensive ‘standing offer’ contracts with their current electricity provider.
Victorian residential and small business customers on standing offers were moved to the VDO from July 2019, standardising a ‘fair’ price for electricity following the Essential Services Commission (ESC).
Similar to the reference price for electricity in other states, the Victorian Default Offer aims to protect customers with capped and competitive electricity prices, especially those who do not regularly engage with plans and prices.
As of 2020, the VDO also acts as the maximum price homes and businesses pay within an embedded network.
How does the Victorian Default Offer work?
The VDO acts as a price cap for customers who do not engage in the electricity market, but it also serves as a reference price when comparing plans with discounts.
The following factors influence the VDO prices set by the ESC:
- Wholesale electricity costs
- Network costs
- Environmental costs
- Retail costs
- Network losses
- Retail operating margins.
Electricity plans with discounts must have the same base pricing as the VDO and show how the discounted plan compares to the estimated annual cost of the VDO, either in monetary or percentage terms.
This is why, for example, plans are marketed at ‘10% less than the VDO’, or ‘5% more than the VDO’.
Electricity plans cheaper than the Victorian Default Offer
The Victorian Default Offer is a competitive electricity price, but customers could save even more by shopping around and switching to one of the cheapest deals in Victoria.
The following table lists some of the cheapest electricity plans across all five of Victoria’s distribution networks in Canstar Blue’s database.
Cheap electricity deals in Victoria
Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Jemena network in Sunbury but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the United Energy network in Frankston but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Powercor network in Bareena but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the AusNet network in Warragul but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Why was the Victorian Default Offer introduced?
The VDO was introduced on the back of an independent review from government and industry regulators that found Victorian customers were paying too much for electricity.
The Victorian Default Offer is part of a larger government initiative planned to make the retail market easier to navigate, as well as more affordable for households and small businesses.
The Australian Energy Regulator (AER) also has a similar scheme called the Default Market Offer (DMO) for retail markets in the following states and territories:
What are the pros and cons of the VDO?
While households on the Victorian Default Offer are somewhat protected in terms of being on a plan with a capped price, there are other things to consider:
Pros
- Fairer electricity prices for customers on standing offers, which change every year.
- Electricity retailers can’t charge more than the default price set by the Victorian government.
- Most residential and small business customers have access to the VDO.
Cons
- Market offers could be available with lower usage and supply rates.
- Do not offer discounts (e.g. pay on time discounts) or incentives (e.g. reward programs).
How much does the Victorian Default Offer cost?
The price of the VDO will vary depending on your distribution zone. To use the VDO as a reference price when comparing plans, you’ll need to know which electricity network you live in.
The annual cost of the VDO differs between the five different distribution zones within Victoria. Differences in tariffs across distribution zones reflect the unique costs of providing electricity services in each area.
Victorian Default Offer for single rate tariffs
The below table shows residential VDO prices across the state’s five distribution areas for single-rate tariffs, based on specific electricity usage requirements. Note: ‘single-rate tariff’ could also be termed as ‘flat tariff’.
| Distribution Zone | 4,000 kWh/year |
|---|---|
| AusNet Services | $1,902 |
| Citipower | $1,456 |
| Jemena | $1,664 |
| Powercor | $1,699 |
| United Energy | $1,554 |
Source: Essential Services Commission (ESC), July 2024.
Victorian Default Offer supply and usage rates
Below are the electricity rates an eligible residential customer will pay on the Victorian Default Offer, depending on where they live.
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| Distribution Zone | Supply charge (daily) | Usage charge (per kWh) | Usage charge – Controlled load (per kWh) |
|---|---|---|---|
| AusNet Services | $1.3354 | $0.3536 (Block 1) $0.3617 (Block 2) |
$0.2512 |
| Citipower | $1.1673 | $0.2575 | $0.1901 |
| Jemena | $1.2105 | $0.3054 | $0.2362 |
| Powercor | $1.3163 | $0.3045 | $0.2226 |
| United Energy | $1.0955 | $0.2884 | $0.2105 |
Source: Essential Services Commission (ESC), Victorian Default Offer – Final Determination. July 2024.
What is the ‘two-period time of use VDO’?
As well as the Victorian Default Offer for single rate tariffs, the ESC introduced a VDO for customers connected to a time of use tariff. This meant that households with a smart meter installed and access to peak and off-peak electricity rates also had a reference price to compare deals with.
The peak time for this two-period time of use network tariff are as follows:
- Residential: 3pm to 9pm every day
- Small business: 9 am to 9pm weekdays.
Off-peak times for both residential and small business customers will be at all other times.
Below are the electricity rates for two-period time of use VDO:
← Mobile/tablet users, scroll sideways to view full table →
| Distribution zone | Supply charge ($ per day) | Peak usage charge | Off peak usage charge ($ per kWh) | Controlled load ($ per kWh) |
|---|---|---|---|---|
| 3pm to 9pm (local time) every day | All other times | |||
| AusNet Services | $1.3354 | $0.4716 | $0.2512 | $0.2512 |
| CitiPower | $1.1673 | $0.3446 | $0.2087 | 0.1901 |
| Jemena | $1.2105 | $0.3870 | $0.2420 | $0.2362 |
| Powercor | $1.3163 | $0.4052 | $0.2457 | $0.2226 |
| United Energy | $1.0955 | $0.3830 | $0.2313 | $0.2105 |
Source: Essential Services Commission (ESC), Victorian Default Offer – Final Determination. July 2024.
How do I know if I’m on the VDO?
Customers who have lived at the same address and can’t recall comparing electricity plans for a while are likely to be on a standing offer. For those needing to confirm, the contract-type should be listed on each providers’ electricity bill.
The contract type can be found in the fine print, so make sure to look out for the breakdown of charges when reading your bill Note: ‘standing offer’ could also be termed as a ‘standard retail contract’.
More importantly, the ESC legally requires all retailers to tell their customers the following on their energy bills:
- Whether they could save more by switching to the retailer’s best offer.
- If so, inform customers how much they could save and how they can switch over to the best offer.
This information is typically found in the ‘Best Offer Messaging’ section of each bill. This section lets you know if there are ongoing market offers that would save you more than sticking to the VDO.
Can I switch to the Victorian Default Offer?
Yes, you can switch to the Victorian Default Offer. Contact your electricity retailer and request that your contract be switched to their Victorian Default Offer. Depending on your tariff type (e.g. time of use), this process may mean switching tariffs to be eligible.
How to find a great electricity deal in Victoria
The Victorian Default Offer has had a significant impact on simplifying electricity prices, but that doesn’t mean it is automatically the best deal.
- Consider other factors such as customer satisfaction, not just your budget.
- Take advantage of other value-adding incentives, such as customer rewards or sign-up credits.
- Above all, actively compare energy plans in Victoria to make sure that you’re always on the best possible energy plan.
Click the link below for Canstar Blue’s comparison tool, which will show a range of plans from Victoria’s biggest electricity providers.
Image credits: Boyloso/Shutterstock.com
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