Victoria’s independent economic regulator has released its draft ruling on the default price for electricity for 2020 with prices set to rise slightly in line with inflation.
If approved, the Essential Service Commission’s draft decision would apply from January 1, 2020.
Introduced on July 1, 2019, the Victorian Default Offer provides a simple, trusted, and reasonably priced electricity option that safeguards consumers unable or unwilling to engage in the electricity retail market.
A recent report from the ACCC has shown Victorian prices have fallen in line with the commission’s advice, which came into effect on 1 July.
Commission chair Kate Symons says under the draft decision, VDO prices for households for 2020 would increase by around 1.3 per cent or $19, in line with inflation.
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“The default price is based on the various cost components of electricity bills, including the cost of distribution and generation of electricity.
“The draft decision reflects increases in market prices for electricity purchases and higher electricity distribution costs,” she said.
The draft decision, now out for public comment, means households on simple standing offers would generally continue to benefit from savings of more than $300 per year compared to electricity bills before the introduction of the default price.
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The VDO currently applies to around 130,000 residential and 30,000 small business customers on simple standing offers. Other customers can ask their retailer to switch to the VDO.
The draft decision also proposes an approach to regulating prices for more complex standing offers, such as those with time of use tariffs, which will be covered by the VDO from next year.
Submissions on the draft decision can be made via Engage Victoria until October 17, 2019.
