More than 130,000 Victorian households paying more than necessary for their energy supply will soon be automatically switched to a cheaper deal.
Average residential customers could save up to $450 a year with the setting of default prices for energy networks.
Starting from July 1, the new regime means anyone on a 'standing offer' will automatically be rolled over to the new, cheaper default price.
"This is the single biggest reform in the energy market in more than a decade," Energy Minister Lily D'Ambrosio told reporters on Thursday.
"Victorians have had a very tough deal being able to navigate the market, it's deliberately confusing."
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Prices will vary according to the location and distribution network, but households are expected to save between $310 and $450 per year, based on an average residential usage of 4000kWh.
Businesses could save between $1380 and $2050.
Energy companies can also offer customers prices, which undercut the default offer, Ms D'Ambrosio added.
The prices have been set based on advice from the Essential Services Commission.
However, opposition energy spokesman Ryan Smith said he was suspicious whether the pricing scheme would actually lower prices overall.
"Every report that has been written about the ramifications of this direction has shown the deeply discounted offers that are currently available to Victorians, many vulnerable Victorians, will dry up as a result of this offer," he told reporters.
"People who have busy lives who are in some cases unable to navigate the maze are just going to take the government on their word that the default offer is the best rate out there, the fact of the matter is it isn't."
EXAMPLE OF ENERGY SAVINGS UNDER NEW PRICING
* AusNet Services: $1528 (bill), $447 (saving)
* CitiPower: $1334 (bill), $307 (saving)
* Jemena: $1385 (bill), $393 (saving)
* Powercor: $1411 (bill), $422 (saving)
* United Energy: $1380 (bill), $331 (saving)
(based on 4000kWh per year)
Source: Essential Services Commission
