Consumer Action Law Centre (Consumer Action) welcomes the opportunity to comment on the Essential Services Commission’s (the ESC) Draft Decision for Victorian Default Offer (the VDO) tariffs to apply for the period 1 July 2022 to 30 June 2023 (the draft decision).
We note that the ESC has essentially used the same approach in this draft decision as they did in their 1 January 2022 VDO price determination. Given our overall support for the 2022 VDO price determination, we are also largely supportive of the 2022-23 draft decision.
However, we question the timing of the changed methodology that has resulted in higher wholesale costs in this decision, particularly when savings from cheaper wholesale prices remain to be passed on to households. Furthermore, in line with previous submissions we urge the ESC to review benchmark charges to households for retail operations, consumer acquisition and retention costs and retail margins, to ensure that the VDO continues to meet the objective of providing, “… a simple, trusted and reasonably priced electricity option that safeguards consumers unable or unwilling to engage in the electricity market.”
That the VDO remain a ‘reasonably priced electricity option’ is particularly pressing at this time, coming amidst escalating cost of living pressures and the challenges of post-pandemic recovery.
While the one percent cost rise in this determination is small, for consumers in financial difficulty any price rise is significant. It is therefore important that benchmarks are subject to ongoing interrogation to ensure costs reflect efficient retail operations.
More detailed comments on these points, as well as other aspects of the draft decision, are provided below.
Read the full submission (PDF).220408 Submission – 2022-23 VDO DD