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Thursday, July 25, 2024

COTA Victoria welcomes movement on energy pricing for seniors

Council on the Ageing (COTA) Victoria and Seniors Rights Victoria (SRV) have welcomed today’s draft decision on the Victorian Default Offer (VDO) by the Essential Services Commission (ESC), and the potential impact of its proposed price decrease for older Victorians.

However, while the VDO is not meant to be the best available price to consumers, more needs to be done to ensure older people can access cheaper energy, the advocacy groups say.

The proposed 2024-25 VDO is lower in price than current prices in the 2023–24 VDO, with the average annual bill for domestic customers on the flat tariff VDO to be 6.4% lower. The ESC has attributed the drop in those annual bills to lower wholesale costs.

“We are extremely pleased to see the VDO is proposed to decrease this year,” said COTA Victoria and SRV CEO, Chris Potaris.

COTA Victoria CEO, Chris Potaris.

“This proposal should spark a reduction in energy prices across the state. While it only equates to an average savings of $112 in a single year, this small relief is still very welcome.

“However, older Victorians –particularly pensioners or those who receive other welfare payments –are often on fixed incomes and therefore vulnerable to the impact of energy prices,” Mr Potaris said. “This modest reduction follows a massive increase of 25 per cent in the VDO last year. Don’t be fooled – even with this decrease, older Victorians on the VDO will, on average, still be paying $240 more for their energy in 2024-25 than in 2022-23.

“Even if the market follows the VDO, a lot of older Victorians will continue to be in a precarious position regarding their energy bills, as their income and resources have not increased accordingly during the cost of living crisis. We are still in a position where some older Victorians will have to make difficult decisions.”

The 2022 State of the Older Nation survey found that 18% of older Victorians had overdue bills, with the single largest cause being energy payments. Research from the Australian Energy Regulator highlighted that people are taking increasingly more steps to limit their energy usage, while evidence indicates that older people taking greater steps to reduce their energy consumption can result in negative physical and mental health implications.

COTA Victoria and SRV were part of a joint submission that represented the shared view of leading Victorian community sector organisations and energy consumer advocates, including the Victorian Council of Social Service, the Brotherhood of St. Laurence, Consumer Action Law Centre, Energy Consumers Australia, Financial Counselling Victoria, and Good Shepherd.

The joint submission highlighted the need for the ESC and the VDO to better reflect the costs that are relevant to the consumers and current cost of living pressures, as well as the need to enforce that retailers are giving customers the best available market offer.

“We continue to believe that greater investment, effort and outreach is needed to make sure that all possible energy supports reach those most at risk,” said Mr Potaris.

“There are too many vulnerable older people slipping through the gaps, while energy use is a key contributor to the health and wellbeing of older Victorians. It is vital that the VDO leads the way, and goes further, in driving down energy costs, especially with the drop in the wholesale price.”

COTA Victoria and SRV say they will continue to work collaboratively with vital partners in the sector to ensure that the VDO is reflective of the energy reality that older Victorians are facing.

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