Victorian power bills must fall by $576 to meet Labor electricity promise, analysis shows

Victorian power bills need to fall by a whooping $576 over the next year for Prime Minister Anthony Albanese to meet his election promise of saving households $275 on their electricity.

Victorian power bills would have to be slashed by up to $576 over the next year for Labor to meet its promise to save households $275, new analysis shows.

It comes as Labor tried to claim credit for a small fall in electricity prices from July 1 for one in 10 Victorian households and one in five small businesses.

But the modest drop will do little to unwind the pain of last year’s 25 per cent price hike on bills, with social service groups warning the latest offer would “trap even more Victorians in poverty”.

The Essential Services Commission (ESC) on Tuesday released the draft Victorian Default Offer, which safeguards consumers who don’t shop around.

It proposed reducing the default offer for residential customers by about $112, bringing the average bill down to about $1643.

An average small business bill on the offer will drop by about $266 to about $3525.

Prime Minister Anthony Albanese promised to cut electricity bills by $275. Picture: Damian Shaw

But Grattan Institute analysis reveals that when Anthony Albanese promised to slash power bills by $275, the average household bill on the default offer was $1342 — a $576 difference.

“It’s very difficult to see how the government can now achieve that number they committed to of $275 off your average power bill, remembering that it was a remarkable commitment to make,” Grattan energy program director Tony Wood said.

Opposition energy spokesman Ted O’Brien said Labor’s broken promise on energy prices was “unforgivable”.

“The Australian people deserve nothing less than a complete and unreserved apology from Prime Minister Albanese for making households and businesses pay for his failures,” Mr O’Brien said.

The proposed default offer price was driven by lower wholesale energy market prices – down 22 per cent – which were partly offset by increased network and retail operating costs.

Increased network costs continue to hit bills: Picture: Aaron Francis

Catastrophic storms that knocked out several transmission towers and plunged 500,000 households and businesses into darkness in February did not affect this year’s offer, ESC chair Kate Symons said.

“We understand affordability remains front of mind for consumers,” she said, adding they could get a cheaper rate if they shopped around.

Victorian Council of Social Service chief Juanita Pope said while any reduction in power prices was welcome, the looming cut would not do much to unwind the pain from last year’s surge.

“Without a dramatic decrease in the baseline price, the VDO will trap even more Victorians in poverty,” she said.

Federal Energy Minister Chris Bowen said the proposed decline in VDO prices was encouraging but there was still “much more to do”.

“I’m not giving up on the plan for cheaper electricity for Australians, others might by introducing the most expensive form of energy available in the world, nuclear,” he said, adding more renewables would reduce prices.

The final decision on the Victorian Default Offer will be made in May before coming into effect from July 1.