The Essential Services Commission’s (ESC) announcement today that electricity bills will decrease for households on the Victorian Default Offer (VDO) is good news, but it is disappointing that the cost of prospective bad debts related to the COVID-19 pandemic are being passed on to customers.
That’s the verdict from Consumer Action Law Centre (Consumer Action) on the ESC’s decision for the VDO price for 2021. Residential customers on the VDO will see their annual 2021 bill fall by an average of 10 per cent.
The VDO is the default price for electricity that is independently set by the ESC. Most households in Victoria have a right to access the VDO, or use it to compare against offers to ensure they are getting value for money.
“Electricity is an essential service and with Victorians spending significantly more time at home due to COVID-19, this year has highlighted the importance of affordable electricity,” says Gerard Brody, CEO Consumer Action.
“For many people in our community, high home energy costs —made worse by the COVID pandemic— are simply unaffordable. The VDO sets a benchmark to help ensure people aren’t ripped off.”
While welcoming the overall reduction in the VDO, Consumer Action is opposed to the ESC’s decision to increase the retail cost benchmark to account for projected bad debts related to the pandemic.
“We object to the inclusion of prospective bad debts and are disappointed by this element of the decision. Retailers, not consumers, should be doing their job to manage risk in the market,” says Mr Brody.
Consumer Action urges the ESC to ensure that the addition for bad debts is temporary and is removed from any future review. Consumer Action also calls on the Victorian Government to implement a Victorian Default Offer for gas so that households are not confused by different rules for essential electricity and gas services. This would also address a gap in protections for Victorians using gas services.
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