Joint submission on 2026-27 Victorian Default Offer

Feedback to the Inquiry into Matters of Import.

The Victorian Default Offer (VDO) is a crucial safeguard for consumers who face structural barriers to engaging with the electricity retail market. We strongly support the VDO’s continuing role in the Victorian energy market, and the Essential Services Commission’s (ESC) role in regularly reviewing and renewing the VDO.

Energy is an essential service, one that people cannot live without and cannot safely discontinue using even if they are unable to pay for ongoing usage and will end up accruing debt. As described in previous community sector submissions to VDO reviews, many people supported by the sector simply cannot afford expensive energy as well as the costs of other essentials, especially if they are living in poor quality housing that is difficult to heat and cool. Because of this, some consumers accrue large amounts of debt. Others, in an attempt to avoid debt at all costs, go to great lengths to pay their energy bills, such as forgoing other essentials, or reducing consumption to dangerously low levels.

As such, we encourage the ESC to consider the costs of pricing decisions holistically, and to centre the consumer in decisions, rather than businesses. This is especially important for vulnerable and low-income households, for whom costs and benefits are a required consideration for the ESC, under the Commission’s statutory obligations.

We welcome the ESC’s consideration of a regulated free power period tariff structure as part of the VDO. As this type of offer is already available in the market, it is crucial for Victorians to have access to a reasonably priced benchmark.
However, we strongly emphasise the difficulty that many consumers face in shifting their usage out of evening peaks, meaning that many households who are most likely to benefit from a free power period offer are those who are already well-off.
In this submission we detail potential consumer protections that would safeguard consumers when selecting free power period offers, including:
• Opt-in only application
• A better-off price guarantee and easy switch back when consumers find they are paying more compared to their previous tariff
• Access to a simple flat tariff that consumers can move to at any time
• Requirements for bill comparisons between a consumer’s current offer and a free power period offer are based on actual consumption and not assumed behaviour change

Similarly, while recognising the need for the ESC to shift VDO time of use (TOU) tariff pricing to a three-price structure to reflect proposed 2026-31 distribution charges, we again emphasise the difficulty that some consumers face in responding to price signals.
Finally, we note that, although the VDO works as a crucial regulatory safeguard, it is ultimately a price calculated on the costs of an unfair and unaffordable market. As such, consumer advocates urge regulators and policymakers to investigate complementary measures above and beyond the VDO, such as a targeted social tariff, to deliver electricity to low-income households at a truly affordable rate.

This is a joint submission made by the Victorian Council of Social Service (VCOSS), Brotherhood of St. Laurence, Community Information and Support Victoria, Consumer Action Law Centre, Council on the Ageing Victoria and Seniors Rights Victoria, Energy Consumers Australia, Financial Counselling Victoria, Uniting Vic Tas, and Westjustice. This group brings a deep knowledge of people’s experiences navigating the Victorian electricity market and the impacts of energy hardship and poverty. Collectively, we work towards a Victoria free from all forms of hardship, where everybody can experience genuine wellbeing.
This submission includes case studies detailing the lived experience of electricity consumers who have been supported by community sector organisations. The names of individuals have been changed.