Contents
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Victorian Energy Market report 2018-19
- From the Chairperson
- An overview of the energy market
- Regulating the energy sector in Victoria
- Performance of energy businesses
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Energy retail products and prices
- What type of energy products are available in the market?
- How have we analysed offers in the energy market?
- What have customers paid for their electricity bills?
- Have the average prices of published energy offers changed in 2018–19?
- How can I compare the range of energy offers available in the market?
- Have discounting practices changed for energy offers available in the market?
- Payment difficulty and disconnection
- Complying with the energy rules
Victorian Energy Market report 2018-19
Published 26 November 2019What type of energy products are available in the market?
Energy offers have different pricing structures
In 2018–19, most retailers offered gas and electricity products in the Victorian energy market, with 15 retailers offering both. The range of available products can vary significantly.
Most energy offers have fixed and variable rates that make up your energy bill. Fixed rates or the ‘daily supply charge’ are often charged as an amount per day. These rates do not depend on how much energy you use.
Variable rates are the amount you are charged for each unit of electricity or gas you use. Variable rates are often referred to by retailers as a ‘usage charge’. These are usually presented on your bill as a ‘cents per kilowatt hour (kWh)’ for electricity, and ‘$ per GJ’ for gas. Variable rates are often structured in three different ways (see figure 4.1):
- Flat tariffs, which is a single rate that applies to your energy usage regardless of when you use it. This can apply to gas and electricity offers. 27 per cent of generally available electricity market offers are flat tariffs. Three per cent of gas market offers were flat tariffs.
- Block tariffs have different rates based on how much energy you use, and differ as you consume more energy. For example, for the first 1,000 kWh of electricity you use (the first 'block') you will be charged at a certain rate, but once you use more than this you will be charged a different rate. The rate per block is often cheaper the more energy you use.
For gas offers, block tariffs can be seasonal, meaning you can have different block tariffs depending on the season. The tariffs during winter are usually higher than in summer. Most gas market offers for residential customers were block tariffs. - Flexible tariffs, which have different rates based on the time of the day you use electricity. These apply only to electricity offers. Flexible tariffs have peak, off-peak and shoulder time periods where different rates are set. Some flexible tariffs can also have more time periods with corresponding rates.
If you have not changed your energy retailer in the past couple of years
You may have what is called a standard contract or standing offer. We determine the terms and conditions of standard contracts, which are set out in our Energy Retail Code.
We did not set the price for standard contracts in 2018–19. However, from 1 July 2019, we recommended to government (who accepted) a set price for simple standard contracts (a flat rate), which is now known as the Victorian Default Offer (VDO). All residential and small business customers on single rate standard contracts were transferred onto the VDO rate.
From 1 January 2020, we set the price for the VDO. The price of the VDO will also apply to other standard contract rates, such as those rates that are time-varying, or have demand charges.
All retailers must offer the VDO and it must be the same for all customers on the same distribution network.
If you have changed retailer before
You are likely to be sold energy on what is called a market contract with your retailer.
Although we determine some minimum standards for market contracts, most of the terms and conditions are set by the retailer. Your retailer can change the price of a market contract at any time, but they must notify you a minimum of five business days before the price change.
Market offers can vary by the following types:
- Discounted market offers have discounts attached to their prices. These discounts might be applied under certain conditions, such as for paying your bill on time or for agreeing to only be billed electronically.
- No discount market offers have no discounts attached to their prices.
- Fixed price market offers are those where the price is fixed for a set period, often 12 to 24 months. These offers may or may not include discounts, depending on the retailer.
If you are on a market contract, you will typically pay less for your energy use than if you are on a standard contract – provided you meet the terms and conditions of the contract.
What to expect when signing up to a new retailer
Before an energy retailer can sign you up as a customer, it must provide you with key information about their energy offer. Energy businesses which do not provide this information cannot sign you up as a customer. We have also introduced new rules that require retailers to be upfront about any terms within a contract that could lead you to paying more than you expect.
You are also entitled to change your mind about entering into an energy contract. Soon after you enter into the contract, energy retailers must provide you with written information about your contract. This includes information such as prices, charges, billing and payment arrangements, the commencement date and duration of the contract.
You then have 10 days to consider the contract and may cancel the contract free of charge within that period. You can also cancel your contract at any time and switch to another contract or another retailer. A small exit fee may be charged (up to $22).