Victorian Default Offer: What is it and how does it affect your energy bill
The Victorian Default Offer (VDO) is an electricity price set by the Essential Services Commission (ESC) in the state, in order to provide Victorians with access to a fair energy deal.
The default offer set by the ESC applies to all standing offers, which energy providers are required to provide. The VDOis set yearly to ensure it is kept up-to-date with changes in the energy market.
What is the Victorian Default offer?
The Victorian Default Offer or VDO is the price of an electricity plan set by the Essential Services Commission that must be applied to all standing offers. The VDO is not the best price you will get on an electricity plan in Victoria, rather the VDO acts as a safeguard as the maximum price a customer can be charged for electricity.
The price is set by the ESC yearly after they have assessed the efficient costs energy retailers need to recover to provide electricity to customers.
The VDO is also the basis for the reference price that each provider must compare their rates to in any advertising materials they release. This is done so that - Victorians can more easily assess when they are being offered a good electricity deal.
Why is the VDO only for Victorians?
The Victorian Default Offer is set for the state by the Essential Services Commission.
There is a separate Default Market Offer set by the Australian Energy Regulator that applies to New South Wales, South Australia and south-east Queensland.
What is the price of the VDO?
The Victorian Default Offer is a flat tariff which includes a daily supply charge and a usage charge that varies by distribution zone. It is important to note that distribution zones are set based on which electricity company distributes power to the area, not which energy provider you are with. The current Default Offer prices for residential customers in 2021 as set by ESC are as below:
|Distribution zone||Supply charge (in $ per day)||Usage charge structure||Usage charge ($ per KwH)||Controlled Load ($ per KwH)|
|AusNet Services||$1.1937||Block 1 (up to 1020kWh used in a quarterly period)||$0.2810||$0.1971|
|AusNet Services||$1.1937||Block 2 (balance of usage in a quarterly period)||$0.2972||$0.1971|
Rates accurate as of 1 October 2021
How is the VDO used by electricity providers?
The Victorian Default Offer is the price that energy retailers must use as their maximum standard offer. Market offers are not required to adhere to this cap, but are usually cheaper regardless.
The VDO is also the basis rate used for the reference price which all energy providers must use as a comparison when advertising their energy plans. The terms VDO and reference price may often be used interchangeably, as the reference price is based on the VDO.
How do I know if I’m getting a good electricity offer?
This will depend on your individual needs and the requirements of your household. While a better comparison to the reference price will mean you’re paying less for your energy usage, you need to consider the supply charge and any other fees attached to the electricity plan.
Thankfully, here at Mozo we make it easy for you to find the right electricity deal for you. Head over to our energy hub to find and compare energy plans in your area, or make use of our handy comparison tool below.