Victoria has flagged its own plans to introduce a regulated free power period for residential electricity customers, one week after federal Labor’s headline-grabbing Solar Sharer Offer was proposed for Queensland, New South Wales and South Australia.
The Essential Services Commission (ESC) said on Friday that it is seeking feedback on a regulated residential tariff with a free power period in Victoria, at the request of state energy minister Lily D’Ambrosio.
The ESC says it is undertaking consultation on the new tariff as part of its broader approach to setting Victoria’s default electricity price for 2026-27, the Victorian Default Offer.
“The time of day that electricity is consumed impacts wholesale and network costs, which are the two biggest components of the VDO,” the Commission says in a statement.
“Residential energy consumption tends to peak in the morning and evenings and is lower in the middle of the day.
“A free power period may help shift when consumers use electricity, reducing demand at the most expensive times of day. This could put downward pressure on wholesale electricity prices and make more efficient use of the network.”
The move has been spurred by the unveiling, last week, of the Solar Sharer Offer (SSO), which proposes to require electricity retailers operating in the state markets governed by the Australian Energy Regulator (AER) to offer free power to households for at least three hours in the middle of the day.
The federal Labor-led initiative is part a suite of “significant reforms” to the Default Mark Offer (DMO), which caps the price energy retailers can charge a small proportion of household and small businesses in New South Wales, south-east Queensland and South Australia.
Like the DMO, the Victorian Default Offer (VDO) aims to ensure access to a “reasonable electricity deal” for customers who are “unable or unwilling to engage in their retail market.”
It also acts as a reference price to compare different deals in the market and as the maximum amount electricity retailers can charge customers in an embedded network, such as an apartment block.
In Victoria, around 15 per cent of households (445,000) and 19 per cent of small business customers (54,000) are currently on the VDO, the ESC said this week. There are approximately 190,000 customers in embedded networks in which the VDO applies as a maximum charge.
But as with the SSO in other states, it appears that the ESC intends to make a regulated free power period available to all residential electricity customers through all retailers.
“We’re seeking feedback from Victorians on the suitability of a regulated free power period and welcome the knowledge and perspectives of the community and industry,” ESC chair Gerard Brody said on Friday.
Interestingly, one of the key reforms being proposed for the DMO seeks to align it more closely with how Victoria set’s the price for its default mechanism – not least because residential customers on the VDO have recently seen prices fall or chart much smaller increases compared to DMO customers in neighbouring states.
“Victorians are leading the nation in the transition to a net zero economy, with our nation-leading investment in renewable energy keeping energy bills and emissions lower than other states,” D’Ambrosio said on Thursday in a statement accompanying the release of the state’s emissions data.
The data, released directly after the federal Liberal Party announced its abandonment of net zero and any other legislated climate targets, shows Victoria’s emissions have fallen by 31% between 2005 and 2023, while the economy grew by 57%.
“Victoria smashed our first emissions reduction target of 15-20 per cent below 2005 levels by 2020, achieving a reduction of over 30 per cent, and we are already within the range of our 2025 target two years early,” the statement says.
“The electricity sector is the largest contributor to reducing emissions in Victoria, with their emissions dropping by 39 per cent since 2005.
“Last financial year, renewable energy generation contributed over 42 per cent of our electricity mix, putting us well on the way to this year’s target of 40 per cent renewable generation.
“When businesses know clearly where we’re headed, they invest with confidence. Meanwhile, the Liberal National Coalition has divided over a decision to ditch net zero by 2050, and Brad Battin’s Victorian Coalition is no better,” the statement says.
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Sophie Vorrath
Sophie is editor of Renew Economy and editor of its sister site, One Step Off The Grid . She is the co-host of the Solar Insiders Podcast. Sophie has been writing about clean energy for more than a decade.
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