The Essential Services Commission has published its draft decision for the Victorian Default Offer yesterday, and it’s not good news for Australians who are already struggling with the rising costs of living which have seen 10 consecutive interest rate increases from the Reserve Bank of Australia.
The report indicates that an average customer on Victorian Default Offer can expect their electricity bill to increase by $426 for the year (from $1,403 per year to $1,829). This equates to a 30% increase.
The news gets worse for small businesses, whose bills are expected to increase by $1,738, or 33%.
What is the Victorian Default Offer (VDO)?
The VDMO is a default retail electricity plan that’s available from any electricity retailer. It is essentially a benchmark retail offer. Most people are not on this offer, as retailers win our business by offering an offer that is below this benchmark. An increase in the benchmark though, almost certainly ensures that retailers will increase their prices proportionally to the VDO.
An alternative analogy for how this works is the relationship between the Reserve Bank of Australia (RBA)’s cash rate, and the interest banks charge on our mortgage. When the RBA lifts their recommended interest rate, banks have permission to lift their interest rates proportionally.
Some Good News
The second round of the Victorian Government’s Power Saving Bonus opens up on the 24th of March. By simply heading to compare.energy.vic.gov.au and comparing electricity offers, the Government will pay you $250. You don’t even have to switch retailers if you’re happy with your current offer.
Better yet, if you didn’t participate in the first round, you could jump on before March 24th, claim the first $250 power bonus, and then return on March 24th and claim another $250!
Steps to take control of your power
You were probably expecting this tip as we’re a bit biased here, but we strongly believe that solar and battery systems are the ultimate hedge against the rising cost of living, especially electricity – which has been increasing non-stop for nearly 2 years now.
Solar Panels give you FREE electricity when the sun is up (typically best between 10 am & 2pm). This is step 1 for sure. It can save you in excess of $1000 a year and provide a return on investment between 20 and 30% a year (incredible numbers considering the ASX200 averages a 7% return).
Step 2 is to then add a battery to your system which acts as a sponge. It soaks up any excess solar power you don’t use during the day, and then releases at night when you use most of your power. People have always said batteries don’t make financial sense, but with rebates on offer from the state government, electricity prices high and rising, and lithium cheaper than it’s ever been – now is the perfect time to invest in your home’s electricity supply and put the power back in your hands (pardon the pun).
Please give us a call to discuss how solar and/or batteries can help you take control of your electricity bill. We are a team of local experts ready to help
You can read more on the VDO 2023-24 draft decision here: https://www.esc.vic.gov.au/media-centre/victorian-default-offer-2023-24-draft-decision
