A guide to energy prices in Victoria
Victorians can often pay thousands for electricity and gas. Knowing how the state's energy pricing works can be the key to saving on your bills.
by Gary Andrews
Last update 1 Aug 2021
The cost of energy in Australia is a major financial strain for many of us.
And despite an expected drop in overall charges for the coming years, the average Victorian is still paying in excess of $1,000 annually for electricity alone.
In this guide we cover what you need to know about energy in Victoria – and how you may be able to reduce your bill.
Electricity in Victoria is distributed via more than 200,000 km of overhead power lines and underground cables.
There are five distribution areas across the state: three in Melbourne's inner suburbs, two in the outer suburbs and regional Victoria.
Gas in Victoria largely comes from the Gippsland Basin and there are a number of pipelines distributing natural gas across the state and to neighbouring states such as Tasmania and South Australia.
The costs are managed by the Australian Energy Regulator.
Gas in Victoria largely comes from the Gippsland Basin
Back in the 1990s, major energy reforms changed government-owned energy to a privatised model.
And after the 2002 Full Retail Contestability for electricity and gas, Victorians have been able to choose their own provider – meaning better prices if you know how to compare and save.
According to a recent report on residential electricity price trends, Victorians paid on average $1,132 in 2019-20 and are expected to pay $1,055 in 2020-21.
While those figures show a minor drop, it's still a significant expense for everyday Victorians.
That's why it's important that you don't 'set and forget' your energy plan.
By comparing and switching, you can find a more competitive rate with a top-quality energy provider.
The Victorian Default Offer is an initiative from the Energy Services Commission (ESC) whereby they determine what they believe to be a fair electricity price -- not the providers themselves.
This gives Victorian consumers "access to a fair electricity deal even if they are unable or unwilling to engage in the retail market".
That means you can ask for the ESC's most recent default offer, or use their predetermined figure to compare offers and get the most value for your money.
The most obvious factor in how much you pay for electricity is the provider you choose.
When you sign up with an electricity provider, they will tell you how much you will pay per kWh.
How much electricity you use also influences your bill.
For example, if you use an air conditioner frequently during the hot summer months, you can expect your bill to be higher than in cooler parts of the year.
The energy efficiency of your appliances plays a role, too -- so always check the star rating of your appliances to see how efficient they are.COMPARE & SAVE
According to the Australian Gas Network, Victorians will pay an average of $1,280 per year on gas bills.
Statista estimates Australian households spend on average $282 a quarter on gas.
The same way your electricity bill fluctuates depending on your provider and energy usage, your gas bill does, too.
So if you are using your home’s gas heater all day during winter, you can expect your gas bill to be much higher than in summer.
Victorians are actually quite lucky in that both their average electricity and gas prices are relatively low compared to most of the other states and territories.
According to the most recent data from the Australian Energy Regulator, Victorian electricity prices were the second-lowest in the country ($40/MWh), only behind South Australia ($35/MWh) and almost half of what people in New South Wales ($71/MWh) pay.
Gas prices are similar, with prices decreasing for the seventh quarter in a row in Victoria, as of Q3 2020.
There’s no clearly ranked system for electricity providers in Victoria, and what you consider the ‘best’ will come down to a range of subjective factors, like overall cost and customer service.
However, some consumers may be interested in companies that offer carbon-neutral options.
Some providers, like EnergyAustralia or AGL, for example, offer carbon-neutral products or carbon-offset initiatives.
To find the best deal for you, it can be a good idea to shop around, read reviews from customers and compare the most competitive electricity prices in Victoria so you can get a provider you will be happy with.
Just like finding the 'best' electricity provider in Victoria, there's no specific gas provider who works best for everyone – although you may prefer a company that has programs in place to reduce its carbon footprint.
In the end, it'll comes down to the deal they can offer you to meet your needs, their level of customer service and their ability to service your property quickly.
That's simple: don't be afraid to compare providers regularly and switch whenever a better offer comes up.
Even the state government says you should compare energy companies at least once every four months and use their 'best offer' to switch to a cheaper provider.
Our experts can help you make the switch in a matter of minutes.COMPARE & SAVE
This guide is opinion only and should not be taken as financial advice. Check with a financial professional before making any decisions.
AEMC, Residential Electricity Trends 2020, Dec 2020.
Energy Victoria, About the electricity sector, June 2021
Energy Victoria, About the gas sector, June 2021
ACCC, The nature of competition in retail markets, July 2005.
AEMC, Residential Electricity Price Trends 2020, Dec 2020.
Australian Gas Network, Costs of Natural Gas, June 2021
Statista, Average Quarterly Consumer Electricity and Gas Bills In Australia, June 2021
Essential Services Commission, Getting the Best Energy Offer, June 2021