In 2002, everything changed. Electricity retailers were freed to compete across the state by offering lower prices than the incumbent. New retailers entered the market and many households were able to sign up to a better deal. But the government was not ready to remove all control from setting prices. Customers who did not switch to a new offer remained on a regulated standing offer, and other consumers could request a standing offer contract from the incumbent retailer when moving house.

This final piece of price regulation was removed in 2009. Yet standing offers still remain. The only difference is that the incumbent retailers are now free to set the price of these contracts. Even though it's been 13 years since Victoria allowed competition in the retail electricity market, one in four households – more than 500,000 – still remain on a standing offer.

Since prices were fully deregulated in 2009, far from cutting power bills, in some parts of Victoria an average household on a standing offer has been hit by an increase of almost 100 per cent. In Melbourne, the figure is 50 per cent, but these figures are big even when inflation is taken into account.

It is not as if electricity retailers cannot offer lower prices; they do all the time. They have a range of competitive offers, known as market offers. In Victoria the big three energy retailers, Origin, AGL and Energy Australia, have market offers with discounts of up to 27 per cent on usage rates. But such offers highlight the extent to which customers on standing offers are being hammered.

A 27 per cent discount is equivalent to a $400 yearly saving on the energy bill for an average Melbourne household relative to what would be paid under a standing offer. Since the retailer is presumably making a profit, or at least breaking even, on the discounted rate, the $400 extra that households on standing offers pay represents pure profit to the retailer.