Power bill relief as energy caps slashed in one state
Hundreds of thousands of households will pay less for energy next financial year after a state regulator lowered the cap on standard electricity quotes.
The average household in Victoria Default Proposal will pay $84 less than the previous year after the Essential Services Commission announced the new cap on Monday, which will apply from July 1.
Small businesses using the default bid will save an average of $241 in 2026/27 under the new settings.
The default bid is the maximum amount energy retailers can charge customers on a rolling offer (a basic electricity contract for people who haven’t signed up to a market deal).
Most Victorians are opting for cheaper market offers rather than the default tariff, but this remains a protection for those unwilling or unable to shop.
It also acts as a reference price in the wider market, as retailers must compare their advertised offers against it.
Approximately 512,000 Victorian households and 62,000 small businesses currently benefit from rolling offers affected by the default offer.
Under the new announcement, the average household bill on a flat rate will drop from $1,675 to $1,591, a drop of about five percent.
The average annual bill for small businesses will drop by six percent, from $3,620 to $3,380.
The reductions are larger than those envisaged in the draft decision the regulator published in March.
Regional customers in the AusNet distribution area will see the biggest cuts, with their annual household bills falling by an average of $160.
The decline was driven by lower environmental certification costs, slightly cheaper wholesale electricity prices and reduced grid charges for households, the Commission said.
He added that Victoria’s electricity market remained relatively stable despite disruptions to global fuel supplies and international energy uncertainty.
The Victorian government said the default offer was now 14 per cent lower than the permanent offer prices it replaced when it was introduced in 2019.
Energy Minister Lily D’Ambrosio said the cuts would provide relief during ongoing cost-of-living pressures.
“Labour is investing in the efficient, renewable energy Victoria needs to make life cheaper for Victorians,” he said.
The state’s default electricity price remains below the benchmark used in other eastern states, he added.
However, NSW, South Australia and south-east Queensland in the national default bid can also expect significantly cheaper energy from July.
In March, the Australian Energy Regulator published a draft decision calling for cuts of up to 10 per cent for some consumers due to lower wholesale and environmental costs.
The average household in NSW could pay between $58 and $226 less than the previous year, while in south-east Queensland bills could be roughly $216 less.
In South Australia, a more modest decline of $31 can be expected.
Small businesses face price declines of between 7.6 percent and 21.2 percent, depending on the region.
The final national default proposal will be published on Tuesday before coming into force on July 1.
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