The deregulation of Victoria's energy retail market has failed consumers, who are stuck paying hundreds of dollars more than needed, a new report has found.
The review of the state's gas and electricity markets says increased competition and deregulation has led to fundamental market failure, and recommends an overhaul to make it fairer and easier for customers to navigate.
"This market is fundamentally failing and needs real intervention and consumers need to be protected," review co-author and former deputy premier John Thwaites told reports on Sunday.
He said Victorians were, on average, paying 21 per cent more for electricity per year compared with the cheapest offer on the market.
"That means people are paying nearly $300 extra on their bill compared to the best offer on the market," Mr Thwaites said.
The panel recommended 11 changes to drive down prices, and one of the key requirements is for retailers to introduce a "no frills" offer regulated by the Essential Services Commission.
"For most people, what they want is energy to make the fridge work and the telly work and that's what this will provide," Mr Thwaites said.
"It would be fixed at a level that is reasonable. So customers that just want a no frills offer without all the confusion could choose that basic services offer and they'll get a better deal."
The review also recommended standing offers - which let the retailer set the price, which is often much higher than in market contracts - be scrapped.
The proposals would also require retailers to make it easier for customers to compare prices, and set contract periods for a minimum of 12 months.
Victorian Energy Minister Lily D'Ambrosio said the review provided a clear path to putting power back into customers' hands.
"The current market offers that are available are far too complex for people to be able to understand and make clear choices," she said.
Other proposals outlined in the report included protections and assistance for low-income customers, expanded powers for the Energy and Water Ombudsman and the introduction of an energy market code based on a an Essential Services Commission review.
The government said it would formally respond to the report by the end of the year.
Opposition energy spokesman David Southwick said the Labor government should not have have forced the closure of the Hazelwood Power Station if it was serious about energy affordability.