The Essential Services Commission is seeking your views about our proposed approach for setting the Victorian Default Offer prices that would apply from 1 January 2022. We released our draft decision paper on 7 September 2021 and are seeking your views until 8 October 2021.
The Essential Services Commission is responsible for setting, and annually reviewing, the Victorian default offer prices. The default offers are designed to be simple, trusted and reasonably priced electricity options that safeguard customers that are unable or unwilling to engage in the market.
Our draft decision paper
We propose using largely the same approach as we did for our current Victorian Default Offer price determination (2021) and believe that this approach will best meet our legislative objectives and requirements.
Our draft decision would lead to the average annual bill for VDO customers going down by 5 per cent for residential customers and 7 per cent for small business customers. This is largely due to forecast changes in wholesale electricity prices.
Our draft decision follows the release of our consultation paper in May 2021. We took into account stakeholders’ submissions to our consultation paper in making our draft decision.
We seek your feedback on our draft decision
In the 2021 Victorian default offer, we included a temporary allowance of $6 per customer to account for the effect of the coronavirus pandemic on bad debts.
We consider that this temporary bad debt allowance may not be required in 2022 and seek further evidence from stakeholders to demonstrate the need, or lack thereof, for the adjustment.
We have estimated a wholesale electricity allowance for 2022 using contracts traded on ASX Energy. We assumed a forecast period of 12-months.
Some stakeholders raised concerns with using a 12-month forecast period for a 6-month regulatory period. Wholesale prices tend to be higher in the first half of the calendar year. This means the wholesale price for a 6-month forecast period would be higher than for a 12-month period.
To estimate Victorian Energy Upgrades costs, we use prices for Victorian energy efficiency certificates over the last 12 months. We then multiply them by the greenhouse reduction rate for electricity to estimate the cost of complying with the Victorian Energy Upgrades scheme.
Some stakeholders raised concerns that our approach may not reflect retailers’ costs. The price of the Victorian energy efficiency certificates has gone up significantly over the past year.
Our draft decision is for the Victorian default offer regulatory period starting 1 January 2021 to be six months. A six-month regulatory period will help us match the timing of the Victorian default offer price changes with network tariffs changes from 1 July 2022.
Read our draft decision
How to participate
How to provide your feedback:
- provide comments in the feedback form on this page
- upload a submission document(s) via the feedback form on this page
- attend our public forum on 23 September 2021. Please register to receive details on how to join.
Submissions are open until 8 October 2021.
As part of making a submission, we need you to provide personal information, such as your name, email address, town of residence and postcode. We may use this information to send you updates about this review. We may also collect personal information when you contact us with a query. Aside from any exceptions in relevant privacy legislation, we will not use or disclose the information you provide for any purpose other than to progress and respond to your query. You have the right to access personal information we hold about you. We may ask you to pay a small fee for this. You can also request that we correct your personal information in our records at no charge by contacting firstname.lastname@example.org.
We will publish your submission
Unless you tell us otherwise we will publish your submission the on the Essential Services Commission website. This process may involve publishing your personal information (your name, not your address). We generally do not accept anonymous submissions. If you have concerns about your identity being made public, please consider making your submission confidential rather than submitting it anonymously.
If you believe your submission contains information that should be confidential or commercially sensitive you must let us know why in writing. If we agree the information is confidential or commercially sensitive you will need to provide us two copies – one complete and one redacted version (preserving page numbers etc by not simply deleting information). If you make your submission public (e.g. by giving it to the media) we will assume confidentiality no longer applies and publish the unredacted version.
Read more information about our submissions policy.
The Essential Services Commission is responsible for setting the Victorian Default Offer prices, which are designed to be a simple, trusted and reasonably priced electricity option that safeguards customers that are unwilling or unable to engage in the market. Each year we are required by the Victorian Government to review the Victorian Default Offer prices we have set to make sure they are based on efficient costs and continue to provide a safeguard to consumers.
The Essential Services Commission is an independent regulator that promotes the long term interests of Victorian consumers with respect to the price, quality and reliability of essential services. We regulate Victoria’s energy, water and transport sectors, and administer the local government Fair Go Rates system.