In January 2020, Victorian households and small business can expect an increase in electricity prices. Here’s what we know so far and what you can do about it. The Essential Services Commission has already confirmed that the cost of Victoria’s Default Offer (VDO) aka the safety net, will step up an extra $110 a year for the average household. Also, the regulator announced that a typical small business customer on the VDO will see a surge of $465 in their annual power bills. While only around 5% of Victorian energy customers are on the Default Offer, the increase foreshadows increases in electricity generally.
Wholesale prices are on the upKate Symons, from the Essential Services Commission, said wholesale electricity costs were the driving force for the price bump. Symons said, “Wholesale costs have increased significantly due to expectations of a hot summer in 2020.” Additional factors pushing future power prices included, “The impact of drought on hydroelectricity generation capacity and the perceived risks of outages in some generation assets .”
How much will Victorian electricity prices increase in 2020?Victorian electricity retailers will be launching price updates from January 1, 2020 for their market offers. In the past, the big three retailers, AGL, Origin and EnergyAustralia, have made announcements in December about their new year price changes. Now, with the VDO in play, we’re yet to see if retailers will share price changes in advance. What we do know is that household VDO cost will be up 7% since the safety net offers were launched in July 2019. However, the Essential Services Commission, have said that customers on the new default will still have lower bills than before. In addition, the average small business default offer steps from $5,900 to $6,400 annually – an increase of 8.5% since July 2019. We anticipate that a number of smaller retailers will continue to provide competitive market offers, as they work to win new customers with better deals.
What can you do?For households, three possible strategies to tackle or sidestep the price changes are;
1) Wait ‘n See. Then shop.In January, retailers should be notifying customers of any price change to their plan. When you know what your retailer is offering, you can then compare market offers at WATTever’s comprehensive comparison. By the third week of January, Victorian energy retailers will have launched their new pricing. Then, it’s a good time to check out if you can find a better deal.
2) Lock into a fixed plan.If you want assurance of your electricity price for a set period, then a fixed-rate plan might be for you. Fixed plans currently available in Victoria (as at 11.12.2019) include;
- AGL Essentials
- Energy Locals Online Saver
- Tango Energy Home Select
3) Check out Solar Homes.If you’re not already a solar owner but have the potential to install solar – then Victoria’s Solar Home’s program is something worth looking into. There has been a frenzy of applications every month to get in the governments half-price solar scheme, backed with an interest-free loan for the balance. Because the upfront incentives will reduce over time, you’ll get more value by participating now. For business owners, three potential plays are;
1) Check your increase. Then find a better dealBusinesses should be advised by retailers of price changes to their plans in January. Then this becomes the basis of comparison to other market offers on WATTever’s comprehensive comparison. Victorian energy retailers will have launched their new pricing and any early adjustments by the third week of January. So, it’s a good time to see if you can improve on your current deal.
2) Fix it now.Getting into a fixed plan before the new pricing may limit the impact any price increase. Fixed plans currently available in Victoria (as at 11.12.2019) include;
- AGL Business Essentials
- Energy Locals Business Saver
- Tango Energy Business Select