Discover how the Victorian Default Offer price rise affects businesses and learn how energy price comparison can help you maximise savings.
Published on 15/06/2025
By Pallav Verma
Energy Comparison
The recent rise in the Victorian Default Offer (VDO) electricity prices for the 2025–26 period has sent ripples through Victorian households and small businesses. With adjustments to electricity rates ranging from 1% to 3%, businesses operating on tight margins now face the daunting task of navigating this new cost landscape while maintaining their competitiveness.
This article breaks down everything you need to know about the VDO price rise and its impact on Victorian businesses. You’ll gain insights into how these changes affect operational costs, tips to adapt, and how comparing energy providers can help mitigate the fallout.
The Essential Services Commission (ESC) recently implemented its final decision on the VDO for 2025–26. The VDO acts as a safety net for Victorian consumers, offering a regulated electricity price for households and small businesses that have not engaged in the retail market or are on standing offers. Here’s an overview of the changes:
These increases vary across Victoria’s five distribution zones, with different impacts based on usage levels and the retail provider. For example:
The price hike is predominantly attributed to higher network costs, which cover electricity transport and distribution, and rising wholesale electricity futures contract prices.
For small businesses, these changes pose significant challenges. Energy costs often represent a substantial portion of operating expenses, particularly for businesses reliant on energy-intensive operations such as manufacturing, hospitality, or refrigerated storage. Here are some of the key reasons why the VDO price rise is a concern for small businesses:
The average $90 hike in energy costs means tighter budgets for businesses already feeling the squeeze of inflation. Even minor increases in electricity expenses can impact their ability to manage cash flow effectively.
Higher utility costs could lead to increased product or service prices, making it harder for small businesses to compete with larger enterprises that may have negotiated more favourable energy contracts.
Businesses investing in sustainability initiatives, such as energy-efficient appliances or renewable energy solutions, may face delayed ROI as energy costs climb.
One of the benefits of the VDO is its role as a benchmark or ‘reference price’ for comparing electricity market offers. Retailers are required to display their rates relative to the VDO, allowing consumers to make transparent comparisons.
While the VDO provides a safeguard for businesses not engaged in the retail electricity market, most market offers from energy providers are available at rates below the VDO price. By comparing electricity providers and energy plans, businesses can potentially reduce their energy costs and unlock significant savings.
Using an energy price comparison service like Econnex empowers businesses to:
Comparing energy rates doesn’t have to be complex. Services like Econnex provide an easy-to-use platform where businesses can compare gas and electricity prices in minutes. Simply enter your postcode, select your usage details, and browse personalised plans from trusted providers in Victoria.
Rising energy prices are a fact of life, but there are proactive steps businesses can take to offset the impact. Here are some effective strategies:
Start by understanding your energy consumption patterns. Identify peak usage periods, high-energy equipment, and unnecessary consumption. This data can guide more efficient practices.
Switching to energy-saving lighting, machinery, and HVAC systems may require an upfront investment but can lead to substantial long-term cost savings.
Consider adding solar panels to your premises or opting for green energy plans offered by many providers. Renewable energy solutions not only reduce costs but also demonstrate a commitment to sustainability.
If feasible for your business model, modify operating hours to align with off-peak rates, which are often significantly cheaper. Learn about peak and off-peak electricity times here.
Small behavioural changes can add up. Encourage employees to adopt energy-efficient practices, such as switching off unused equipment or making smarter thermostat adjustments.
Energy prices and offers change frequently, making it important to revisit your plan annually. By staying proactive and using tools like energy comparison platforms, businesses can ensure they’re always on the most cost-effective plans.
Despite its price rise, the VDO remains a valuable tool for Victorian small businesses. It ensures a standardized reference price, simplifying the process of comparing market offers and holding retailers accountable. By understanding and leveraging the VDO, businesses can make informed decisions that align with their operational and financial goals.
The VDO price rise for 2025–26 highlights the need for vigilance in managing energy expenses. For Victorian small businesses, the stakes are higher than ever. By comparing electricity providers and adopting energy-efficient practices, you can mitigate these price increases and maintain your profitability.
By staying informed and comparing energy offers, your business can take proactive steps to manage electricity costs effectively.
