Victorian households could save more than $500 a year on power bills under a ‘default offer’ awaiting a green light from state parliament.

The Essential Services Commission on Friday quantified the plan’s estimated savings, which include up to $2300 a year for the average small business.

‘Customers who haven’t shopped around for a while, or who have struggled to meet discount conditions, will find the Victorian default offer could save them hundreds of dollars,’ commission chair Ron Ben-David said in support of the Labor government proposal.

Under the proposed legislation, the commission will be responsible for annually reviewing the default offer and retailers will be obliged to comply with its ruling.

‘Around six per cent of Victorian households have been stuck on standard contracts which have risen in price by over 20 per cent in just the last two years,’ Dr Ben-David said.

The Australian Energy Council is opposed to the deal, due to come into effect from July 1.

‘While it might benefit a very small minority of retail customers who have not shopped around and who are on standing offers, it risks damaging competition and with it the cheaper market offers that the majority of households currently enjoy,’ council Chief Executive Sarah McNamara said.

The default offer price will vary across Victoria and customers can opt in by making a request through their supplier.

The state’s Liberal-Nationals opposition has questioned elements of the deal. The Greens say the laws do not go far enough.