You open your electricity bill and frown! The numbers don’t make any sense – zero discounts, only rows of charges that seem more inflated than ever! You wonder, “is this really the amount I should be paying?”
Does it sound familiar? You’re not alone! Across Victoria, many budding businesses and households remain on default energy contracts without even understanding it; they remain on plans that frequently provide little clarity or reward. This is where the importance of the Victorian default offercomes into play!
Introduced in July 2019 by the ESC (Essential Services Commission), the VDO was built to stop consumers from getting penalized for not changing energy plans. It sets a transparent, fair electricity price benchmark that energy retailers can’t exceed for default contracts.
This blog offers an in-depth yet easy-to-understand guide on the default electricity pricing in Victoria that includes the following –
- How it’s determined
- Who it benefits
- Why it’s crucial for the future of electricity regulation Victoria
Let’s break it all down, in simple terms –
A Quick Summary
The VDO, or Victorian Default Offer refers to a government-regulated electricity cost cap designed to safeguard Victorian consumers – particularly those who haven’t secured a market deal. This insight explains the VDO in very simple words, explores its overall impact on your electricity bill, and shows what it signifies for electricity regulation Victoria.
Key takeaway – In case you’re paying more than necessary, the VDO might already be the built-in protection you didn’t know you had.
What Is the Victorian Default Offer?
VDO Explained in Simple Terms –
- Understanding Exactly How the VDO Works
The Victorian Default Offer refers to a regulated electricity rate set every year by the ESC. It serves as a benchmark for energy retailers while offering energy plans and deals to customers.
Crucial Features of the VDO
- Capped pricing: Electricity retailers are not allowed to exceed this rate on default plans.
- Government regulated: Maintains consistency across all providers.
- Applicable to standard energy plans: If you haven’t selected a competitive deal, the VDO acts as your fallback rate.
- Not the most affordable plan: It makes sure that you’re not exploited.
- VDO Price Snapshot (As of July 2025)
| Region | Annual Usage (kWh) | VDO Reference Price (AUD) |
| CitiPower | 4,000 | $1,543 |
| Powercor | 4,000 | $1,631 |
| Jemena | 4,000 | $1,675 |
| AusNet Services | 4,000 | $1,842 |
| United Energy | 4,000 | $1,751 |
Important Note – Rates differ depending on your distributor as well as energy consumption.
Why Was the Victorian Default Offer Launched?
Before 2019, countless Victorians were unintentionally tied to highly expensive electricity plans – overwhelmed by conditional discounts and hidden terms. The system lacked clarity and frequently penalized loyal consumers.
The Victorian Default Offer signalled a huge shift in electricity regulation in Victoria, introducing accountability, fairness, and transparency to the energy sector.
Electricity Regulation Victoria: A Big Turning Point
- Customer Protection and Energy Justice
Before 2019, many consumers got stuck on high-cost plans without exploring better options that existed. The power sector was cluttered with unclear discounts and confusing fine print. The VDO changed that! It brought Victoria’s electricity regulation into a more transparent, consumer-centric, and accountable era.
“The VDO is about clarity, fairness, and restoring reliance in the energy system.”
- Kate Symons, Chairperson, Essential Services Commission
- Who Does the VDO Help?
- Low-income households
- Consumers on standing offers
- Elderly or time-poor consumers
- Small to medium businesses with very basic electricity needs
If you haven’t transitioned to a market deal – or feel the energy space is confusing –the VDO always acts as your safety net. Still uncertain whether you’re on any standing offer? Check your electricity bill or contact your energy provider. In case your price closely aligns with the VDO reference price, it’s likely that you’re on the VDO.
How Is the VDO Determined?
The Victorian Default Offer isn’t only determined without basis – it’s built on a detailed cost analysis. Each year, the ESC (Essential Services Commission) thoroughly reviews current industry conditions to help maintain pricing that’s transparent and fair.
Check What Is Behind the Pricing
- Factors That Redefine the VDO
The ESC establishes the Victorian Default Offer once a year using –
- Wholesale electricity costs
- Network charges (distribution + transmission)
- Retail operating costs
- Market + environmental fees
- A fair profit margin
The ultimate goal? A cost-reflective cost that ensures energy retailers earn fairly – without overcharging consumers.
Regulatory Oversight & Yearly Updates
Every year, the ESC assesses market costs, trends, and policy shifts to set a new VDO price. It includes public consultation, with input from consumer advocates, industry bodies, and energy retailers.
This annual reset ensures that electricity regulation Victoria stays aligned with market realities when safeguarding consumers.
When Should You Switch From the VDO?
The VDO is reasonable, but it’s not always the most affordable.
If you're looking to compare offers, competitive plans often come with –
- Time-based discounts
- Bundled services
- Green energy options
But beware: Compare different plans through the VDO reference cost as an insightful guideline to steer clear of misleading discounts.
- Quick Decision Guide: Should You Switch or Stay?
| Situation | Recommended Action |
| You’re uncertain about which plan you're on. | Contact your retailer. |
| You haven’t switched plans in 12+ months. | Review current VDO benchmark. |
| You want the lowest price possible. | Compare different plans using VDO. |
| You value stability over discounts. | Consider staying on VDO. |
Are you still confused? To clear your confusion, you can read our guide on “Know Your Rights: Energy Consumer Protections in Australia.”
FAQs About the Victorian Default Offer
VDO Explained in Simple Terms for Everyday Australians –
1.Is the VDO the most affordable electricity price available?
No, it’s a completely regulated rate – but better market deals might exist.
2. How do I tell if I’m on a VDO plan?
Check your electricity bill or contact your provider. VDO plans are clearly labelled or priced close to the reference price.
3. Can businesses access the VDO?
Yes, absolutely! Small businesses with annual usage below 40 MWh can opt for the VDO.
Final Words: The VDO Goes Beyond Just a Price Cap
In a constantly changing energy market, the Victorian default offer offers a reliable foundation. It doesn’t just cap costs – it restores transparency, simplifies comparisons, and empowers customers.
Whether you’re a homeowner, renter, or small business, gaining an understanding of the VDO explained in simple terms helps you make more informed decisions. To dive deeper into your protections and entitlements, be sure to explore our blog, “Know Your Rights: Energy Consumer Protections in Australia.”
Do you want to stay updated on the future VDO changes? If yes, then subscribe to our energy market brief and don’t miss an update again!
