About the Victorian Default Offer

What is the Victorian Default Offer?

In Victoria, electricity plans must be compared to a standard, government-set benchmark price. This price is called the Victorian Default Offer (VDO).

The VDO was implemented to make electricity plans more affordable and transparent for consumers. It also makes it easier to compare electricity plans, as all providers must display a reference price comparison to the VDO. This means customers can really compare apples to apples when viewing available electricity plans.

What is the reference price and how is it calculated?

The reference price is a cost estimate based on the VDO rates for an average customer's energy usage. It’s calculated based on your tariff type and distribution area , excluding any applicable fees, concessions, solar feed-in tariff credits or sign-up credits for new customers.

The price is specific to your area and tariff because there’s no one set electricity price for everyone. Electricity costs are made up of several factors, including distribution costs (i.e. the cost of transporting electricity to your home or business) which are different in different areas. For example, the cost of getting electricity to a home in metro Melbourne is different to getting it to a home in rural Victoria. Other costs that make up your final rate include the wholesale cost of electricity, environmental costs, retail costs and GST and other costs.

The reference price also needs to assume how much electricity is being used, so the calculation uses an average consumption. Your actual bill may vary depending on how much energy you use.

What is a standard/default offer?

If you join a default offer, meaning you haven't chosen a specific market plan, you will be placed on the current VDO price and rates. By regulating this price, the government can ensure that even people who choose not to keep an eye on their electricity plan will be on affordable, controlled rates.

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