Why are Victorian energy prices changing?

There’s a lot that goes on behind the scenes in the world of electricity. To ensure your lights turn on every day, retailers, like us, must pay underlying costs that make powering your home possible.

Every year those in the energy supply chain review these costs and decide what to charge all energy retailers.

Once a year, usually in July for Victorian customers, we update our prices to reflect these changes in external costs.

While we hope this means we can reduce your prices, sometimes market conditions will result in an increase. The impact to you is also dependent on your energy usage, distribution network region, among other factors.

The Victorian Default Offer (VDO)  governs retail energy pricing in the state. For FY22/23 the VDO has increased by an average of around 5% for both residents and small business.

These are the main underlying costs that make up energy prices and can cause power prices to change:

• Wholesale costs: This is the price of electricity we buy from a generator to supply to you. Australia has an over-reliance on fossil fuels and recently its price has significantly increased due to the war in Ukraine and unplanned power plant outages. As a result, the price of wholesale electricity has more than doubled compared to this time last year and is the main cause behind increased energy prices in FY22/23.
• Network costs: These costs contribute to one third of your energy bill and goes directly to network service providers who maintain power infrastructure, such as poles and wires, that are necessary to supply you with electricity. These changes vary between distribution network region and tariff type, and often depend on any infrastructure upgrades or extensions that are required.
• These costs contribute to one third of your energy bill and goes directly to network service providers who maintain power infrastructure, such as poles and wires, that are necessary to supply you with electricity. These changes vary between distribution network region and tariff type, and often depend on any infrastructure upgrades or extensions that are required.
• Environmental costs: As more and more customers install solar, retailers are required to purchase certificates that are surrendered to the Clean Energy Regulator. This cost represents about 10% of your bill.
• Retail costs: Retail operating costs reflect a range of expenses incurred by an electricity retailer in conducting its business, these costs make up about 10% of your bill. Retail costs can include billing and revenue collection systems, IT systems, call centre costs, provision for bad and doubtful debts and regulatory compliance costs.