The Victorian Default Offer (VDO) was designed to re-regulate electricity pricing to ensure that more Victorian households receive a fair price on their electricity service. Since the VDO’s establishment in July this year, more Victorians have been able to access fairer prices for their essential electricity usage even if they are not actively engaging in the energy market.
The prices under the VDO will reset from 1 January 2020, and Consumer Action Law Centre (Consumer Action) has welcomed the opportunity to comment on the Essential Service Commission’s (ESC) Victorian Default Offer to apply from 1 January 2020 Issues Paper.
We support the VDO intervention in the Victorian electricity market. This regulated price is needed to ensure fairness in the energy market. The VDO also provides a useful consistent reference point for what is fair for those that do engage. These protections are only effective where the pricing independently set by the ESC reflects what is efficient.
In general, we support the approach to the first reset of VDO pricing that is discussed in this issues paper. However, there are certain areas where the ESC must go further to ensure that elements of the price setting process align with consumer’s interests. These include:
- focus on delivering an efficient price when setting the VDO,
- ensure that retailer information provided to the ESC that varies retail operating cost benchmarks is not the result of double counting or inefficiencies, and
- cap the amount all households on the VDO pay to the flat tariff VDO rates, and any potential overcharging should be calculated in advance and be credited on billing.