A Guide to Gas, Electricity & Solar in Melbourne & Victoria

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.

How does the energy market work in Victoria?

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.

What is the average electricity bill in Victoria?

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.

What is the Victorian Default Offer?

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

Victorian Default Offer for residential customers

GST inclusive. Correct as of 08 Aug 2024

What impacts my electricity bill?

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.

What is the average gas bill in Australia and Victoria?

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.

What impacts my gas bill?

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.

How do energy costs in Victoria compare to other states?

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.

Who are the best providers for electricity in Victoria?

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.

Who are the best providers for gas in Victoria?

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.

What's the best way to save money on my energy bills?

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.

Sources

AEMC, Residential Electricity Trends 2021, Dec 2021.

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

AER, Australia Wholesale Statistics

Essential Services Commission, Getting the Best Energy Offer, June 2021

Paul Coughran is the General Manager of Emerging Verticals at Compare Club. Paul has over 20 years of experience across a wide range of industries including Banking and Finance, Telecommunications and Energy. Paul leads a team of trusted experts dedicated to helping individuals make informed decisions about their insurance and utilities needs.

Meet our energy expert, Paul Coughran

Paul's top energy tips

• 1

  Australia’s top three energy companies still hold 64% of the total Australian market, even though competition was deregulated in 2017.

• 2

  If you don't shop around for energy providers, you’re probably leaving your savings on the table by failing to compare better value options.

• 3

  Most energy providers offer discounted rates for new customers, which is a strong incentive to switch.

• 4

  There should be no interruption when you switch energy providers. You'll need to pay a new company for your energy, but there won't be a disruption to your power supply.