Small electricity retailers will go out of business in Victoria, and savvy customers who have found the cheapest deals will be forced to pay more, if the Andrews government follows through on its promised cheaper deal, according to an industry report.

Plans to reduce electricity costs for Victorians could backfire, the industry warns. Credit:John Shakespeare

The energy market lobby group has hired Craig Emerson, a former minister in the Rudd and Gillard governments, who has assessed the Andrews government’s policy and urged it to back off from its plan to impose a default offer on the market.

But the state government is standing firm, saying its plan will bring fairness to the energy market, saving households hundreds of dollars on their bills each year, and that small businesses will benefit by thousands of dollars.

Dr Emerson said in his report on the Victorian default offer (VDO) that the government’s intervention in the electricity market would have “adverse consequences” for competition and price-sensitive customers, including customers who were economically vulnerable.