{"id":536236,"date":"2026-03-12T20:17:13","date_gmt":"2026-03-12T20:17:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/536236\/"},"modified":"2026-03-12T20:17:13","modified_gmt":"2026-03-12T20:17:13","slug":"electricity-bills-to-fall-in-state-where-renewables-make-up-nearly-half-of-generation-mix","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/536236\/","title":{"rendered":"Electricity bills to fall in state where renewables make up nearly half of generation mix"},"content":{"rendered":"

The cost of electricity looks set to fall in all five of Victoria\u2019s electricity distribution zones, the state\u2019s pricing regulator has advised, cutting household energy bills by nearly $50 in the coming financial year and by around $170 a year for small businesses.<\/p>\n

The Essential Services Commission (ESC) draft decision on the 2026-27 Default Victorian Offer (VDO) proposes that prices for domestic customers will decrease across the board by between $43 and $48 a year, compared to 2025-26, averaging out at $46, or a roughly 3 per cent drop.<\/p>\n

Annual prices for small businesses on the VDO would decrease across the five distribution zones by between $165 and $179, compared to 2025-26, averaging out at a $172 decrease on last year (5%), the ESC says.<\/p>\n

The VDO caps the price electricity retailers in the state can charge a small proportion of household and small businesses on standing offers. <\/p>\n

But like the Default Market Offer (DMO), which is set separately by the Australian Energy Regulator for the rest of the National Electricity Market (NEM) states, it also acts as a sort of benchmark for all retail offers.<\/p>\n

In publishing the draft decision for Victoria on Thursday, ESC chair and commissioner Gerard Brody said it had been made \u201cwith the best available data and with consideration for long-term interests of Victorian consumers with respect to price, quality and reliability of essential services.\u201d<\/p>\n

\u201cIf you\u2019re someone who is willing and able to review your electricity plan each year, you\u2019ll be able to find cheaper deals,\u201d Brody said. \u201cBut if you don\u2019t want to be swapping deals each year, the default offer is a good, fair option.\u201d<\/p>\n

The proposed reduction in Victorian electricity prices comes in an election year for the state, and at a time when the messaging from the federal Coalition opposition takes on an increasingly anti-renewables, anti-climate action flavour.<\/p>\n

In Victoria, where the Labor government is targeting 65 per cent renewable generation by 2030 and 95 per cent by 2035, renewables now account for around 45 per cent of the state\u2019s electricity mix. <\/p>\n

Last month, state energy minister Lily D\u2019Ambrosio said the state\u2019s record investment in renewables had helped the achieve the lowest wholesale power prices in the country.<\/p>\n

\u201cOver the last year, Victoria\u2019s average wholesale price was $78 per megawatt-hour, compared to $103 for New South Wales, $96 for Tasmania, $87 for South Australia and $85 for Queensland,\u201d she said.<\/p>\n

\u201cVictoria\u2019s draft default offer is going down,\u201d D\u2019Ambrosio added on Thursday in an emailed statement to Renew Economy.<\/p>\n

\u201cWe know the cost of living is still tough for many Victorians. Only Labor will invest in the energy infrastructure needed to lower bills and crack down on big energy retailers taking advantage of Victorian families.\u201d<\/p>\n

For its part, the Victorian Liberal Party last month announced<\/a> that it will introduce \u201cstrict new independent audits and economic impact assessments on new energy developments\u201d if elected in the state poll in November.<\/p>\n

\u201cCommunities across regional Victoria are increasingly concerned about the Allan Labor government\u2019s approach to rolling out renewable energy projects without properly considering the long-term impact on agriculture and food production,\u201d shadow energy minister David Davis\u00a0said<\/a>.<\/p>\n

For Queensland, New South Wales and South Australia, the AER should deliver its own draft decision on the DMO in coming days. Traditionally, however, the VDO has delivered either bigger annual price reductions or smaller increases than the DMO. See last year\u2019s decisions as a case in point<\/a>. <\/p>\n

For this reason, among others, the AER is weighing up a suite of proposed \u201cupdates and refinements\u201d to its annual DMO determination, including a tariff-based approach to electricity price setting and the extension of protections to more renters and apartment dwellers.<\/p>\n

The AER released an\u00a0issues paper to this effect in November<\/a>, just one day after the federal government unveiled a package of 10 recommended changes to the regulatory framework for the DMO, the result of a review to address growing concerns the market safeguard was no longer fit for purpose.<\/p>\n

The reforms include the headline grabbing Solar Sharer proposal, which seeks to compel retailers to offer all customers in DMO regions at least three hours of free power in the middle of the day, courtesy of Australia\u2019s abundant rooftop solar production.<\/p>\n

For the Solar Sharer Offer, the federal government is running its own stakeholder consultation process\u00a0here<\/a>, feedback from which the AER says will inform its approach to how it is calculated as part of the 2026-27 DMO (DMO 8).<\/p>\n

You can read more reports and analysis about the Solar Sharer Offer\u00a0here<\/a>,\u00a0here<\/a>\u00a0and\u00a0here<\/a>.<\/p>\n

The other nine recommendations emerging from the federal review of the DMO are set out\u00a0here<\/a>\u00a0by the Department of Climate Change, Energy, the Environment and Water (DCCEEW).<\/p>\n

As a whole, the reforms aim to \u2013 as DCCEEW puts it \u2013 \u201cstrip out unnecessary costs and expand protections\u201d of the DMO. More specifically, the main changes focus on the way maximum prices are set and on bringing new consumer segments into the fold.<\/p>\n

On price setting, the review calls for the AER to determine a tariff cap for specified small customer types instead of an annual price at a set usage amount.<\/p>\n

That is, instead of setting a cap on total price of a standard offer payable for each customer each year, a price cap will be determined for each kilowatt hour of electricity consumed.<\/p>\n

In Victoria, around 17 per cent of households (510,000) and 21 per cent of small businesses (61,000) are currently on the VDO, which also covers the apartments, retirement villages and caravan parks on embedded networks that cannot choose their own electricity supplier.<\/p>\n

If you would like to join more than 29,000 others and get the latest clean energy news delivered straight to your inbox, for free, please\u00a0click here to subscribe to our free daily newsletter<\/a>.<\/p>\n

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