Since its implementation on 1 July 2019, the Victorian Default Offer (VDO) has given more Victorian energy users access to fairer pricing for their essential electricity services.
In our comment to the Essential Service Commission (ESC) on the Victorian Default Offer to apply from 1 January 2020 Draft Decision (Draft Decision), we assert that the ESC must focus on achieving the objective of the VDO, particularly that the price is reasonable in reflecting only the efficient costs of operating an electricity retail service.
While we largely support the Draft Decision, the ESC should adjust the proposed methodology for regulating the VDO compliant maximum bill to ensure fair and consistent outcomes for all disengaged households. In particular, the ESC should also reduce benchmark charges to households for retail operation costs, consumer acquisition and retention costs and retail margins.
Decision makers must also put complementary policies in place to ensure that all who need the protection of the VDO actually default to it – that there is no barrier to accessing the VDO from any licensed retailer and that a VDO for gas is introduced.