Victorian Default Offer 2026–27 final decision: Electricity prices set to fall

Victorian electricity prices are heading down from 1 July 2026, with the Essential Services Commission (ESC) confirming lower Victorian Default Offer (VDO) prices for both households and small businesses that are on default plans.

The final determination delivers slightly larger reductions than the draft decision released earlier this year.

Most Victorian customers are not directly affected by the VDO, as the majority are already on market offers rather than standing offers. However, around 512,000 households, or 17% of residential customers¹, and 62,000 small businesses, or 21% of small business customers¹, remain on standing offers across Victoria.

For Victorian customers on standing offers, the changes mean lower regulated electricity prices across all five distribution zones.

But while the VDO acts as a safety net, only customers on standing offers will automatically benefit from these price drops. Most businesses will need to review their energy contract to see any savings. It makes now a good time to get a Bill Comparison with an expert.

For a more in-depth understanding of the Victorian Default Offer, visit: https://www.victoriandefaultoffer.com.au/

What changed between the draft and final decision

The ESC's final determination delivered slightly lower prices than the draft proposal released in March.

The biggest drivers behind the updated reductions were:

• Lower environmental costs

• Updated network tariffs

• Softer wholesale electricity costs

Environmental costs were a major factor, falling around 46% compared with the previous year. This was largely driven by lower renewable certificate prices and reduced retailer compliance costs.

Residential electricity prices

Average residential electricity bills under the VDO are set to fall by around $84 annually, or 5%¹, compared with 2025–26 levels.

The average annual residential bill across Victoria is now expected to sit at around $1,591¹.

Residential VDO comparison¹

AusNet customers recorded the largest reduction from last year, while United Energy customers saw the smallest decrease.

Small business electricity prices

Small business customers saw even larger reductions in the final determination.

Average small business VDO bills are expected to fall by around $241 annually, or 6%¹, bringing the average annual bill to approximately $3,380¹.

Small business VDO comparison¹

AusNet customers again recorded the largest reduction, with annual standing offer prices falling by more than $500 compared with 2025–26 levels. Powercor customers saw the smallest reduction.

Why prices are falling

The final determination reflects softer market conditions compared with recent years.

Lower environmental costs were one of the biggest drivers behind the reductions, while wholesale electricity prices and some network costs also eased.

The result is lower standing offer prices across every Victorian distribution zone, particularly for small business customers.

One important change: New time-of-use periods for residential customers

The 2026–27 VDO also introduces updated time-of-use pricing periods.

A new daytime "solar soak" period has been introduced between 11am and 4pm, reflecting growing solar generation during the middle of the day.

Peak periods will now apply later in the day, between 4pm and 9pm.

The change reflects how the electricity market is evolving, with midday electricity becoming cheaper as solar generation increases across the grid.

What this means for Victorian customers

The final determination is welcome news for customers still on standing offers, although most Victorian households and businesses are already on market offers and will not be directly impacted by these regulated VDO changes.

A small portion of customers remain on standing offers across Victoria, and for those customers, the final determination means lower regulated electricity prices from 1 July 2026.

The VDO is designed as a safety net. Some market offers may still provide lower pricing depending on your energy usage, tariff structure and contract terms.

For businesses especially, reviewing your current rates and contract structure remains important as market conditions continue to shift. With pricing conditions improving, now is a good time to check whether your current plan still suits how your business operates.

How Zembl can help

Understanding energy pricing changes is one thing. Knowing whether your business is actually on a competitive plan is another.

While the VDO sets a regulated safety-net price, many Victorian businesses are already on market offers with different pricing structures, tariffs and contract terms.

Zembl helps businesses compare their current rates against competitive market offers from leading Australian energy retailers.

All we need is a recent energy bill. From there, our Energy Experts can review your current pricing, compare available options and help determine whether your business could reduce energy costs.

We handle the comparison process from start to finish, helping businesses stay in control of their energy costs without the complexity.

_{¹ All statistics and pricing data sourced from the Essential Services Commission Victorian Default Offer 2026–27 Draft and Final Determinations.}