Power bills are set to be slashed across Victoria next month.

From January 1, Origin Energy, which services about half a million Victorian households, will cut electricity prices by an average of 11 per cent.

The cut will see electricity prices fall to their lowest point in five years.

The average household on a variable plan will save an estimated $186 next year.

The Herald Sun reports other retailers are likely to follow with substantial cuts, after the overall regulated default offer was cut by 10 per cent.