Electricity and gas companies will no longer be able to "bait and switch" customers by luring Victorians with discounted offers, then hiking prices within a few months, following a raft of changes by the state's energy regulator to make contracts fairer.
The Essential Service Commission's reforms are in response to an independent review of the state's retail markets for electricity and gas.
Under the changes, from July 1, energy retailers will only be allowed to increase prices once a year, and must clearly communicate to customers the time at which prices may change.
"These reforms will help Victorians have confidence in the deal they are signing up to, knowing they will be protected and there won't be any nasty surprises," commission chairperson Kate Symons said.
Retailers will also be required to maintain discounts, credits or rebates for the entire length of a customer's contract.
Other changes to the rules include a requirement that energy companies provide a comparison to the Victorian Default Offer.
Customers will be rolled onto this price for electricity or the best offer for gas at the end of their contract.
Discounts for paying on time will be capped at a level set by the commission, so that customers who miss a bill payment do not face a large increase in costs.
Currently, energy companies that undercharge customers can back-bill 9 months' worth of the underpayment.
The commission is consulting Victorians on a proposal to reduce the allowed back-bill period to 4 months.
Jake Lilley from the Consumer Action Law Centre said he hoped the commission's next step would be to regulate gas prices in the same way electricity prices are regulated under the Victorian Default Offer.
"Gas will take more work to regulate but it is important, because consumers generally find navigating different gas companies more complex than electricity," Mr Lilley said.
Victorians can have their say on this proposal on Engage Victoria until March 27.
