How does Amber translate the default market offers to the prices listed in our factsheets?

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At Amber, we pass through true wholesale prices to our customers - and these prices change every half hour. However, as a part of Australia’s energy law, all energy retailers are required to publish energy plan factsheets which have a standard format so that our plans can be compared. For this, we use the default market offer - against which we make our price guarantee - so we show the highest average price you would ever pay with Amber on these factsheets.

We want to be totally transparent about how our prices are calculated in our energy plan factsheets and how these relate to the default offer prices set by the regulatory bodies. To explain this, there are a couple of questions we want to answer:

  • What is an energy plan factsheet?
  • What is a default market offer? 
  • How does Amber translate the prices in published default offers to the ones in our energy plan factsheets?

Let’s get started…

 

What is an energy plan factsheet?

Under the National Energy Retail Law, energy retailers are required to have Basic Plan Information Documents (BPIDs), or Victoria Energy Fact Sheets (VEFS) in VIC, for each of their offers. These are factsheets that help you to compare offers because all retailers must include the same information in the same format. It’s also what the comparison websites like Energy Made Easy, or Victoria Energy Compare in VIC, use. You can find our factsheets here

At Amber, we pass on true wholesale prices to our customers, so the prices in these documents only reflect the maximum average price we would ever pass through over 12 months. And, see our pricing page for prices our customers are paying in your area based on historical data.

 

What is a default market offer?

The default market offer (DMO), or Victoria Default Offer (VDO) in VIC, was introduced after an independent review into energy prices found that people were paying more than they should for electricity. The intent is to make the electricity market simpler and more affordable for all consumers.

Under the DMO, the price of electricity is set by Australia’s independent energy regulator, the Australian Energy Regulator (AER), annually. Under the VDO, the price of electricity is set by Victoria’s independent energy regulator, the Essential Services Commission, annually. The prices vary by network as each electricity network has different prices.

 

How does Amber translate the prices published in the default offers (DMO / VDO) to the ones in our factsheets (BPID / VEFS)?

For Customers outside of Victoria (in the National Electricity Market): DMO to BPID 

The DMO is provided as a Single Annual Cost for a given annual energy consumption (e.g., $1500 per year for 5000 kWh). To convert this to an equivalent price per kWh with Amber, we break this down into the relevant components of energy cost per kWh, daily supply cost based on each network (but approx $1/day), and our Membership fee of $15/month. Basically, we subtract the daily supply costs and membership fees from the $1500 and then divide by 5000 kWh to get the implied price per kWh. The implied price is calculated to be equivalent to the government defined default offer - it’s what we publish in the factsheets for comparison purposes.

Implied price per kWh example: 

= [ Single Annual Cost - Membership fee - Supply cost ] / Annual energy consumption

= [ $1500 - $160 - $365 ] / 5000 kWh

= $0.195 / kWh

 

For Customers in Victoria: VDO to VEFS  

The VDO is expressed as a Daily Supply Charge and per kWh charge. Our Daily Supply Charge is different (and historically has been lower) than the Daily Supply Charge quoted in the VDO, which varies by network. Therefore, we calculate a Single Annual Cost based on 4000 kWh per year (i.e., 4000 kWh x VDO / kWh Charge + 365 days x VDO Daily Charge). Once we have this annual number, we follow the same principle as we do for the DMO to calculate the implied price per kWh. 

Single Annual Cost calculation (with illustrative VDO):

=  Assumed annual energy consumption x VDO / kWh Charge + 365 days x VDO Daily Charge

= 4000 kWh x $0.25 / kWh + 365 days x $1.10 / day

= $1401.50

Implied price per kWh example: 

= [ Single Annual Cost - Membership fee - Supply cost ] / Annual energy consumption

= [ $1401.50 - $160 - $365 ] / 4000 kWh

= $0.219 / kWh

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