Independent regulator announces Victorian electricity default offer

The Essential Services Commission has released its final decision on the Victorian Default Offer to apply from 1 July 2025 to 30 June 2026.  

The final decision follows industry and community consultation on the draft decision released in March, as well as further economic analysis using the latest data.  

The Victorian Default Offer is a fair, independently set electricity price that:   

• gives Victorians access to a reasonable electricity deal, even if they are unable or unwilling to engage in the retail market 

• acts as a reference price so customers can more easily compare different deals in the market 

• is the maximum amount electricity retailers can charge customers in embedded networks, such as apartment buildings and office blocks. 

Approximately 12 per cent of households (348,000) and 19 per cent of small business customers (55,000) are currently on the Victorian Default Offer. There are approximately 190,000 customers in embedded networks in which the Victorian Default Offer applies as a maximum charge.   

The commission’s rates vary between the state’s five electricity distribution zones, which accounts for the different costs of providing electricity across the state. 

Domestic 

For domestic customers on the Victorian Default Offer, changes to annual prices vary, dropping by $26 in one distribution zone but increasing by between $4 and $90 in others, compared to 2024–25. The average across the five zones is a $20 (one per cent) increase on last year. 

The main factors influencing the price change for domestic customers are higher network and wholesale electricity costs, which are partially offset by lower environmental costs. 

Small business 

For small businesses on the Victorian Default Offer, annual prices would increase across the five distribution zones by between $10 and $177, compared to 2024–25. The average across the five zones is a $90 (three per cent) increase on last year.  

The main factors influencing the price change for small business customers are higher network and wholesale electricity costs but also lower environmental costs. 

Higher network and wholesale costs also contributed to the change in price between the draft proposal and final decision.  

In making our final decision, we have used up-to-date cost inputs including: 

• network tariffs and metering charges approved by the Australian Energy Regulator 

• final ASX Energy futures contract prices on 16 April 2025  

• other smaller costs, dependent on available data.  

This new information has led to modest changes from the draft decision. The final default offer has reduced for some customers and increased for others, compared to the draft decision. 

The commission considered all submissions when reaching its final decision and thanks everyone who provided feedback on the proposed rates. 

Quotes attributable to Essential Services Commission Chairperson and Commissioner Gerard Brody 

“These prices are set independently of energy retailers, which ensures all Victorian households and small businesses have access to a fair and reasonable price. It also gives people confidence that they’ll continue to receive a fair deal without having to test the market each year.” 

“The default offer isn’t the cheapest on the market, as retailers look to attract new customers by offering a low price. But it is a fair price and one that won’t increase by more than the Essential Services Commission allows, which means it will stay fair.” 

“We value the input, knowledge and perspectives we received in response to our draft decision. It informed our work, and we thank everyone who contributed to the consultation.”