Higher power bills to 'drive Victorians to poverty'

·3-min read
Diego Fedele/AAP PHOTOS

Victorians will be driven into poverty by higher power bills after the state's economic regulator pushed forward with its default offer increase, community advocates warn.

The Essential Services Commission (ESC) on Thursday announced there would be a 25 per cent rise, meaning annual power bills will cost an extra $352 for residential customers and $752 for small businesses.

Typical bills for residents will increase from $1403 to $1755 from July 1, while the bills of small business customers will rise from $3039 to $3791.

The commission said the changes were primarily the result of high wholesale energy market prices, driven by market volatility in 2022.

"We understand that rising energy prices are very challenging for consumers who are experiencing cost of living pressures at the moment," commission chair Kate Symons said.

"We wanted to remind all Victorians that you are entitled to support and assistance under the strongest energy consumer protection framework in Australia."

The final offer is lower than the draft proposal the commission put forward in March, meaning residents are about $74 better off. 

"I would hope that we wouldn't see price increases of this magnitude again in the next cycle," Ms Symons said.

The commission's decision does not effect the 85 per cent of Victorian households on market offers, Ms Symons said - a point the Consumer Action Law Centre rebutted.

When the default offer rose, so too would prices across all retailers in the market, centre chief executive Stephanie Tonkin said.

Victorian Council of Social Service chief executive Emma King said the increase was a "real body blow" to Victorians in the midst of the cost of living crisis.

"Make no mistake, this will drive people into poverty," she told reporters on Thursday.

Ms King acknowledged the final offer was lower than the draft proposal, but said it was still a huge increase, especially considering last year's five per cent hike for the voluntary default offer.

"When we look at what CPI is, we know that it's nowhere near 25 per cent," Ms King said.

Mr Tonkin said advocates were still supportive of the default offer model as a "safety net" for consumers.

However, it should still take into account cost of living pressures, she said.

Electricity retailers were also feeling the brunt of the changes as they were exposed to greater risk and financial pressures, the Australian Energy Council said. 

"It is incumbent on the regulator to enable retailers ... to cover their costs," chief executive Sarah McNamara said.

"By changing the rules of play so abruptly, rather than in a phased and transparent way, the ESC has just made that a lot harder."

The commission flagged the state's $250 power saving bonus as a way for consumers to find some bill relief.

Ms King said another round of the bonus would go some way to easing the strain on consumers, but noted older people who feared the scheme was a scam were among the least likely to claim the bonus. 

Premier Daniel Andrews encouraged Victorians to compare their energy contracts with others in light of the default offer increase.

But he would not commit to another round of the power saving bonus, given 1.4 million households have already applied.

"If we're in a position to provide ... further cost-of-living support, then of course we will," Mr Andrews told reporters on Thursday.

About 400,000 residents and 55,000 small businesses are on the Victorian default offer.

It is also the maximum amount that can be charged to about 150,000 Victorian consumers in embedded networks, such as apartment buildings and shopping centres.