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Compare Electricity Victoria

Victoria is one of the most competitive electricity markets in Australia. Their early deregulation made way for more retailers to enter the market, bringing competitive plans, attractive rewards and giving you the chance to compare and save.

Read on to find out more about Victorian energy and make sure you’re getting the best deal on your bill

This guide will help you understand everything you need to know to compare electricity in Victoria. We will explain everything from how energy is generated and distributed in the state, how this affects the price and the other factors that determine your bill. And of course, most importantly, we’ll explain how to find a cheaper bill for your home.

Contents:

  • How does electricity reach my home?
  • How is the Victorian
  • electricity price determined?
  • Compare electricity plans
  • Switch electricity providers

How does electricity reach my home?

There are three industries involved in powering your home or small business – electricity generators, distributors and retailers. The role of each of these industries in Victoria, and the impact on your bill, is explained below.

Electricity Generation in Victoria

The main source of electricity in Victoria is the state’s three coal-fired power stations – Yallourn, owned by Energy Australia, in the Latrobe Valley and Loy Yang A and B, owned by AGL, in Traralgon.

Between them, these three power stations generate approximately 50% of Victoria’s electricity. The remaining 50% comes from gas turbines and renewable sources. All three stations are scheduled to close by 2048, as Victoria continues to transition to renewable energy.

The Victorian Government plans to reduce the state’s electricity consumption with significant investment in renewable energy. They have already invested $1.6 billion in renewables, putting the state on track to meet the 2030 renewable energy target of 50%. Victoria generates renewable energy from solar farms, wind farms and hydroelectric power systems.

As part of the renewable energy initiative, Victorian households are being offered discounts on solar panel installations, including no up-front costs. Solar power can help households save anything from $5,000 to $8,000 on their energy bills. In addition, it helps save our planet by providing a cleaner energy source.

Electricity Distributors in Victoria

Once electricity has been generated, it passes through transmission networks and distribution lines to reach your home or business. Electricity distributors are in charge of the infrastructure to transport electricity, including the poles and wires that make up the grid.

In Victoria, there are five electricity distributors, each servicing a different area.

  • Citipower – Melbourne city and inner suburbs
  • Jemena – Northern and south-western Melbourne suburbs
  • Powercor Australia – Western Melbourne suburbs and western Victoria
  • AusNet Services – Outer northern and eastern Melbourne suburbs and eastern Victoria
  • United Energy – Southern Melbourne suburbs and the Mornington Peninsula

Each distributor has a different cost for transporting electricity, depending on how far they need to carry it from the generator. The distributor passes the cost on to energy retailers, who include the charge on consumers’ bills. The cost of your distribution charge will depend on the network area you live in.

Electricity Retailers in Victoria

Now that the electricity has been brought to your door by the distributor, it’s the role of the retailer to manage your account and track your usage in order to supply a consistent power source to your home. The amount the retailer charges you needs to cover the cost of the generator, distributor and their own retailer costs.

The cost of electricity in Victoria varies between retailers and plans. Victoria is one of Australia’s most competitive energy markets, with more than 25 companies vying to provide electricity, gas or both.

You can read more about Victoria’s energy retailers here.

How is the Victorian electricity price determined?

As you’ve just read, the price of electricity covers the cost of the generator, distributor and retailer. But there’s more.

The other factors that determine your bill are the wholesale cost of electricity, where you live and the time of day. The price of the Victorian Default Offer (VDO) also plays a pivotal role in determining the final cost of electricity. The main factors are discussed in more detail below.

  • Wholesale electricity prices

    The wholesale price of electricity has a direct impact on how much the retailers need to charge customers. If the cost of wholesale electricity rises, it follows that retailers need to increase their electricity rates to remain profitable.

    Several factors can affect the wholesale price of electricity in Victoria:

    • The cost of coal – 70% of Victoria’s power is generated using fossil fuels. Coal powered power stations produce the majority of electricity. So when the price of coal increases, the cost of generating power goes up too.
      Coal prices have increased for several reasons. COVID-19 border restrictions caused global distribution issues and flooding and bushfires led to domestic problems. In 2022, the war in Ukraine caused the global cost of coal to rise, as countries placed sanctions on Russian coal.


    • Limited supply – the supply of power to the east coast has suffered due to power station outages in NSW and QLD. Most significantly, the explosion in the Callide C Unit 4 at the Callide Power Station in Mount Murchison limited electricity generation. The generator is still out of action and predicted to be unavailable until mid-way through 2023.


    • Power station closures – several power stations have closed as part of the transition to renewable energy sources, with more closures planned. Unfortunately, the slow uptake of renewables means the closures have left a deficit in supply and forced prices upwards.
      When Hazelwood Power Station closed in March 2017, wholesale prices in Victoria jumped up 85% compared to 2016. With more closures planned, this impact is likely to be felt long term. The Yallourn power station in Victoria’s Latrobe Valley will close in mid-2028, four years ahead of schedule. Loy Yang A is planned to close in 2040.


    • Slow implementation of renewables – the decrease in coal-fired power is being offset by Australia’s commitment to green energy. However, the transition has been slower than planned, leaving a gap in supply.
      The Clean Energy Council says that frequent policy changes, market reforms, grid connection issues and network constraints have caused the delays.
      Mr Koenders, head of energy research at Barrenjoey, said “until we get to that endpoint where there is sufficient hydro build-out and battery storage as per government targets, we are going to continue to face increased volatility in the electricity market”.


    • Increased demand for power – adding to the supply shortage issue, power demand has shot up. Warm temperatures and heatwaves caused a sharp increase in electricity usage in summer. In addition, the re-opening of workplaces after the lockdowns meant more energy being used in the CBD.
  • Metro vs Regional energy prices

    Part of your electricity bill is based on the cost of transporting electricity to your area. It follows that customers in hard to reach, regional areas pay more for their electricity. This includes the cost of building and maintaining the poles and wires that make up the electricity network in your area.

    In Victoria, there are five distribution network areas. Customers in each different area can expect to pay a different rate for their electricity.

    The cheapest distribution networks are Citipower, United Energy and Jemena, covering central parts of Melbourne and metro areas. Customers in regional areas can expect to pay more under the Powercor and Ausnet networks.

    Customers on the cheapest Citipower rates pay up to $200 less per year than those in the most expensive Powercor network.

  • Time of Use (ToU) Tariffs

    During times of peak consumption, Victorians pay more for their electricity usage. Peak demand times are between 3 pm and 9 pm when people are using cooling or heating systems, televisions, lights and other household appliances. The cold Victorian winters can also cause peak demand for the use of heating.

    In recent years, peak demand has grown due to population growth and the increase in technological use. As a result, electricity distribution companies needed to build more infrastructure, which in turn has increased electricity prices for consumers.

    The amount you pay for your electricity at different times of day depends on the rate agreed in your plan. There are three types of tariffs:

    • Single rate – customers on a single rate tariff pay the same rate for electricity, regardless of the time of day.
    • Time of Use – these tariffs use a smart meter to track how much electricity is consumed during off-peak times. Customers on a Time of Use tariff pay a lower rate for electricity used during off-peak periods.
    • Controlled load – this tariff charges a lower rate for certain appliances that are separately metered. Controlled loads are common for items such as hot water systems or underfloor heating. These appliances generally run during off-peak times to access the lower rates.
  • The Victorian Default Offer (VDO)

    The Victorian government deregulated electricity pricing in 2009. This allows providers to set their own prices and as a result, electricity prices are very competitive in Victoria.

    However, following the deregulation, it was found that retailers were charging long-standing customers an expensive ‘standing offer’. This meant that people not actively engaged in the market were paying hundreds of dollars more than they should.

    In response to this finding, the Victorian government introduced the Victorian Default Offer. This is a government regulated price that sets the maximum cost of electricity in the state. Retailers also have a range of ‘market offers’, which are usually better deals than the VDO. To avoid paying too much for electricity, find out if your plan is the VDO or a market offer.

    You can read all about the VDO here.

What are the different charges on my electricity bill?

Each of the factors discussed so far affects the total amount on your electricity bill. You will see four different charges on your bill, each one is explained below.

  • Consumption charge: This is the total amount your retailer charges for the energy used in your household or small business. The cost is calculated using the rate per kWh multiplied by the total number of hours used.

  • Demand charge: The demand charge relates to power used during peak times, usually between 3 pm to 9 pm on weekdays. When you compare plans, look for a low off-peak rate. You can take advantage by using your heavy appliances during these cheaper periods.

  • Supply Charge: This is the price retailers pay to distributors to maintain the network’s infrastructure, including poles and wires. It also includes the retailer’s fixed costs such as account maintenance and meter readings.

  • Distributor Charge: This charge is applicable if the distributor was required to perform actions outside the regular supply of energy. This might include additional services such as same-day connections or emergency works.

Compare Electricity Plans in Victoria

Now that you are an expert on Victorian electricity, you can compare all the products on the market with confidence. Retailers offer different rates, discounts and rewards, plus, you might be eligible for a concession. With all these variables, there’s lots to think about!

Victorian Electricity Rates and Discounts

When you look at a retailer’s rates, the most expensive plan is usually the VDO. If you haven’t compared your plan recently, you are probably on a default plan and paying the more expensive VDO rate.

  • Market offers
  • Retailers have a range of market offers to choose from, offering different benefits depending on your needs. These benefits might include fixed rates with a guaranteed discount for 12 months, low off-peak rates and controlled load rates.
    You might also find retailers offering limited-time discounts and sign up bonuses. Make sure you find the products in the market that give you the best value and save you money long-term (be wary of short-term offers that might cost you more in the long run).

  • Discounts

    More discounts can be unlocked for paying your bills on time, using direct debit or bundling other services. Many retailers will also reward you for signing up online or opting for paperless bills.
    With the various types of discounts available, it can become confusing trying to figure out which is the best deal. Retailers are now required to display their discounts and market offers as a percentage of the VDO to make it simpler to compare.
    Make sure you understand the length and conditions of your discount. If you don’t meet the conditions, you could be left paying a higher, non-discounted amount. Most discounts only apply for 12 months, so make sure you compare your plan before your discount runs out. If you don’t sign up for a new plan, you will be transferred to a more expensive VDO plan.

  • Other incentives and rewards

    Many Victorian electricity retailers have additional financial incentives for moving your energy account to them. Common rewards include sign-up bonuses of up to $100 and discounts from partner companies. For example, Alinta Energy offers 12 months of free access to Kayo when you sign up for their Sports Pack, or you can earn Qantas points with both Alinta and Red Energy.
    Several retailers have rewards shops where you can earn points when you pay your bill. You can spend your points with their rewards partners including movies, theme parks, hotels, dining experiences and much more. In Victoria, rewards are available with Origin, Alinta, Lumo, AGL, Red Energy, Sumo and Covau.

Victorian Electricity Concessions

For low-income households, the Victorian Government provides a range of electricity discounts and concessions. These concessions are in addition to any discounts or rewards you receive from your retailer. To find out more contact your energy provider or visit the Department of Human Services.

Victorian Energy Plans

Below is a summary of some of our preferred electricity retailers in Victoria. You can read our full list of retailers here so you can compare and save.

EnergyAustralia

EnergyAustralia is one of the ‘Big Three’ energy retailers. They are one of the biggest energy companies in Australia, servicing more than 1.7 million nationwide.

  • Our favourite feature

    EnergyAustralia has exceptional customer service, in fact, it’s award-winning. They have been named No.1 Digital Customer Experience for 6 years running by Global Reviews.

  • Our favourite plan

    You can choose from a wide range of options with EnergyAustralia, including no lock-in contracts and fixed-rate plans. You can also choose a carbon-neutral option at no extra cost. The best plan for you will be the one that suits your unique energy needs.
    Our personal favourite is the Total Plan and NBN 100 bundle. This bundle gives you a 12% discount on the VDO for electricity and a 33% discount on gas. The rate is guaranteed for 12 months, plus there are no exit fees and the plan is 100% carbon neutral. You also get a $50 credit for signing up online, plus a $10/month discount for bundling your energy and NBN.

Tango

Tango is a Melbourne based energy company, with a customer service team in Geelong. They are a great choice for Victorian customers looking for local knowledge and support.

  • Our favourite feature

    Tango is the retail arm of Pacific-Hydro Australia, one of the countries leading renewable energy generators. They specialise in green energy plans, including solar, renewable energy options and their 100% green energy plan.

  • Our favourite plan

    You can make great savings with Tango by bundling your electricity and gas, or choose their Tango Blue Plan to power your home with 100% renewables.
    Our favourite Tango plan is the Solar Saver, which offers electricity and gas rates fixed for 12 months at 14% less than the VDO, plus a guaranteed Solar Feed-In Tariff that’s 25% higher than their other plans. You’ll also enjoy the peace of mind of no lock-in contracts or exit fees.
    To switch your plan to EnergyAustralia or Tango call CheapBills on 1300 786 045 or enter your details here. If you want to browse more retailers, see our full list here.

Switch Electricity Providers in Victoria

It’s important to understand your energy usage habits to find the best deal. You can make big savings with a plan tailored to your needs. Our comparison service can help you compare electricity plans to find the best deal for your unique requirements.

Before you switch, it’s important to take into account your whole financial situation, including financial products such as home loans, credit cards, life insurance and other insurance products so that you understand your budget before you start.

How do I switch?

The best way to make the switch is to use a comparison tool like CheapBills. As you’ve just read, there is a lot of expert knowledge and variables involved in finding the best plan. That’s where we can help. CheapBills has a team of experts that will understand your energy needs and find you the cheapest deal from our panel of providers.

Our energy price comparison experts will not only find you the best deal but take care of the switch for you, so all you have to do is sit back and start saving!

Call CheapBills on 1300 786 045 or enter your details here.

Related articles

  • Things to consider when comparing electricity prices
  • How to switch providers
  • How to connect your electricity
  • Understanding discounts on electricity
  • Solar power
  • Smart meters
  • Energy retailers in Australia

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