“The intention would be to flatten the aggregate demand curve by shifting consumption to the middle of the day and reducing demand at peak times.”
Over the long term, the ESC says, the electricity network could be used more efficiently and wholesale prices may come down.
Victorian Energy Minister Lily D’Ambrosio.Credit: Oscar Colman
Examples of these new habits could include Victorians charging electric vehicles during peak periods or setting timers on pool cleaners and dishwashers.
The commission’s investigation will include considerations about how the scheme would work, including whether it would be opt-in, and what times of day it would operate.
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Victoria’s electricity distributors already offer free power between 10am and 3pm. However, this must be set up by retailers who can opt their customers in as part of their market contracts.
Gavin Dufty, the national director of energy at St Vincent de Paul, said Victoria needed to change consumption habits otherwise the state would have to use its “emergency backstop” powers to switch off solar panels when supply was too high.
“We’ve got too much juice in the system,” he said.
Dufty said there were some downsides that needed to be managed.
Having too many consumers in the middle of the day had been linked to voltage issues on the network, he said, and some smaller retailers on thin margins might struggle to absorb the costs required to offer free power.
Critics have also argued the scheme could discourage solar uptake by providing households with the rooftop solar benefits without the associated costs.
Gavin Dufty, the national director of energy at St Vincent de Paul.Credit: Dominic Lorrimer
The Australian Energy Council, the peak body for electricity retailers, has opposed the proposal for other states and will make a submission to the Victorian regulator.
A spokesperson for the council said every retailer was different in how it managed its finances and enforcing universal access to a product would put some businesses at risk and potentially force them to shut down.
The spokesperson said any new policy would need to be accompanied by other changes to make sure retailers providing free power weren’t also paying the charges they currently pay to fund the maintenance and operation of the network.
“Without this change, this offering is unlikely to be successful,” the spokesperson said.
The significant uptake of rooftop solar has produced an electricity generation glut in the middle of the day.Credit: Getty Images
“While we welcome initiatives aimed at improving options for customers introducing a complex regulatory solution like this increases risks to retailers, and if implemented poorly, is likely to deliver unintended outcomes for consumers.”
An Allan government spokesperson said some electricity retailers already offered free power periods.
“We are consulting on the best ways to share the benefits of free electricity with Victorians,” they said.
The commission will investigate the regulated free power period as it opens consultation for its 2026-27 Victorian default offer, which sets a safety net on how much money customers can be charged if they do not sign up for more competitive market offers.
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Under the current default offer, a typical household bill is estimated to be about $1675 a year, a $20 increase on the year.
About 15 per cent of all households, or 445,000 homes, are on this safety net alongside 54,000 small businesses.
“The default offer isn’t the cheapest on the market, as retailers look to attract new customers by offering a low price,” Essential Services Commissioner Gerard Brody said.
“But it is a fair price and one that won’t increase by more than the Essential Service Commission allows, which means it will stay fair.
“We’re seeking feedback from Victorians on the suitability of a regulated free power period and welcome the knowledge and perspectives of the community and industry.”
Consultation on the free power period will be open until December 12 on the Engage Victoria website.
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