Consumers split on state’s new power price tariff

Household power bills are set to wear a $20 price rise, however the Essential Services Commission argues most who switched to the state’s default offer in July are still vastly better off.

Power bills are set to rise in January, after the Essential Services Commission revealed the state’s new default tariff will be raised about $20.

The Victorian Default Offer will increase 1.3 per cent from the new year, while businesses will be slugged an extra 1.7 per cent.

For average households, which pay about $1500 a year for electricity, that would be represent about an extra $20.

However, most households shifted on to the VDO when it was introduced in July are still vastly better off overall.

The Victorian Default Offer will increase 1.3 per cent from the new year, while businesses will be slugged an extra 1.7 per cent.

The VDO has replaced a “standing offer” tariff that was up to $450 more expensive than the present offer.

In its draft decision, the ESC said the purpose of the new tariff was “to provide a simple, trusted and reasonably priced electricity option that safeguards consumers unable or unwilling to engage in the electricity retail market”.

Retailers are still able to provide different “market offers”, which can provide consumers higher or lower prices than the default.

Some consumer advocates applauded the new system for giving people an easy to understand price. But others warned it could mean more innovative deals — that offered cheap prices for households that shop around — would disappear.

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The ESC report notes retail operating costs have increased slightly due to “recent regulatory changes” so this will flow through to household bills.

Customers had been paying about $124 for retail margins but this would go up “an additional $10 per customer, noting this may reduce over time”.

Higher wholesale and network costs expected next year were the main contributors to higher bills expected next year.

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