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Quick facts about the Victorian Default Offer
- What is it? An initiative introduced by the Victorian government to help ensure consumers aren't paying too much for their energy bills.
- When did it happen? 1 July 2019.
- Who does it affect? All Victorian households and small business customers.
What is the Victorian Default Offer?
The Victorian Default Offer (VDO) was introduced by the Victorian government to help ensure consumers aren't paying too much for their energy bills.
You can benefit from the VDO in a few ways:
- Get a fair deal. The VDO is designed as a "fair price" and you'll be automatically placed on it if you don't buy a specific energy plan. It's not necessarily the best price, though.
- Easily compare plans. Plans use the VDO as a reference, with their price expressed as a certain percentage higher or lower. This lets you compare plans quickly and easily.
- Stay updated on deals. Under the VDO, your provider is required to inform you whether you're on their best deal every 3 months (for electricity) or 4 months (for gas).
What is the default offer where I live?
The default offer depends on what energy distributor you have, which is determined by where you live. The Essential Services Commission has a full list of distributors and their VDO prices.
So should I just keep my plan and rely on the VDO?
Although the VDO is a fair price, it's unlikely to be the best price you can get. Many market offers from providers will have rates lower than the VDO.
This is by design, since the VDO is intended to stop customers paying ridiculously large sums for electricity, not be the most competitive deal. Here's an example of how plans from a few providers compare to the VDO price.
| Energy retailer | Cheapest market offer | Victorian Default Offer | Savings |
|---|---|---|---|
| Elysian Energy | $1,089 (23% less than VDO) The Good Life | $1,420 | $331 |
| Momentum Energy | $1,220 (14% less than VDO) Self Serve | $1,420 | $200 |
| Alinta Energy | $1,221 (14% less than VDO) Home Deal | $1,420 | $199 |
| Powerclub | $1,230 (13% less than VDO) Powerbank Home Flat | $1,420 | $190 |
| Tango Energy | $1,234 (13% less than VDO) EasySave | $1,420 | $186 |
Price assumes general energy usage of 4,000kWh/year for a residential customer on a single rate tariff. Estimated price includes any discount that may be available. Price last checked July 2020.
How much can I save?
The Victorian Essential Services Commission calculated that the VDO saved the typical Victorian household on a standing offer between $200 and $330 on annual bills.*
If you're on a VDO standing offer, you stand to save up to $200 per year by changing to a market offer, according to median bills in the AER's 2019-2020 annual retail market report.
* Source: The Victorian Default Offer
How do I know if I'm on a standing offer?
If you haven't checked your energy plan in a long time, purchased a new one or moved, chances are good that you've fallen onto a standing offer. To confirm whether you're on a standing offer, simply check your last energy bill. It will have your contract type listed on it.
Bottom line
To summarise, here are the most important points about the VDO:
- No customer can be charged more than the VDO dictates if they don't stay on top of their energy plans.
- You might pay more than the VDO with some market offers from providers.
- The VDO will differ depending on what distribution zone you're located in.
- Energy retailers must compare their energy plans to the VDO when advertising rates.
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