Power prices are set to soar for hundreds of thousands of customers because they are stuck on expensive default plans
- More than 120,000 families and 43,000 businesses face exorbitant power bills
- From 1 January 2020 Victoria’s default energy price cap will rise 7.8 per cent
- Customers that remain on default offer plans will be charged the highest rate
Power prices for 160,000 customers on default plans are set to increase.
Victoria’s energy price regulator, the Essential Services Commission, has allowed the default power offer rate to increase by 7.8 per cent from 1 January 2020 due to higher running costs for energy retailers.
The change will affect more than 120,000 families and 43,000 business across the state currently on a default power plan.
Customers are being encouraged to shop around for the best deal for them in order to avoid the increase.
More than 160,000 Victorian customers are on default power offers and will pay the highest price (stock image)
Gavin Duffy from poverty advocacy group St Vincent De Paul said the price hike was inevitable.
‘There was never really going to be a price reduction. It was always going to go up,’ he told 7 News.
A default offer is the annual maximum total bill amount energy companies can charge customers based on a set average usage amount.
Household power bills will rise by $110 to just over $1500 each year while the price for businesses will jump to $6400.
The ESC said customers would still have lower bills than what they had before the default offer was introduced in July.
A Victorian Government spokesperson said retailers were required to tell customers on their bills what their best offer was.
According to Energy Australia, a default offer is a reference price designed to make it easier for customers to compare energy plans across different providers.
Energy retailers are free to set supply and usage charges as long as the total bill is equal or less than the Default Market Offer reference price.
The Essential Services Commission has risen the default power offer rate 7.8 per cent from 1 January 2020 due to higher running costs fro energy retailers (stock image)