Video transcript - Australian Energy Regulator explains how electricity prices are set

Video summary: The Australian Energy Regulator’s General Manager Market Performance Stephanie Jolly explains the Default Market Offer/electricity price safety net.

Published: 13 March 2023


(Background soft instrumental music plays for the duration of the video. Opening page with yellow and white text on a blue background and an infographic of a white light bulb with a dollar sign.)

(A female appears against a white background and begins speaking. The words ‘Stephanie Jolly, General Manager Markets Performance’ and the Australian Energy Regulator appear on screen.)

“Hi. I’m Steph Jolly. I’m the General Manager of Market Performance here at the Australian Energy Regulator.”

(The Australian Energy Regulator logo and the words ‘’Protect energy customers’ appears on screen in blue text on a white background, alongside the female speaker.)

“The purpose of the Australian Energy Regulator is to make energy consumers better off, both now and in the future. And we do that by regulating the electricity and gas markets, to protect customers.

“The DMO acts as a safety net for customer who can’t shop around or who may have few options than others.”

(The screen cuts to blue text on a white background and the words ‘What is the Default Market Offer (DMO)? Safety net. Price cap.” appear.)

“Without it there wouldn’t be any cap on what electricity retailers could charge you.”

“It’s also a really important reference point for customers who choose from different types of retail plans.

(The female speaker appears again, against a white background.)

“Retailers are required to show you how the prices compare relative to the DMO so you can always understand how much you’re better off switching to an alternative offer, and how those offers compare to each other.

(The words ‘, free, independent” appear in blue text on a white background, alongside the female speaker.)

“We’ve also established Energy Made Easy, our free comparison website. It’s an independent service that enables customers to look at everything that’s available in their area, and upload the information from their bill if they wish to get a personalised set of comparison options.”

(The female speaker disappears and the words ‘How is the DMO set? Wholesale costs (generating), Network costs (poles and wires), Environmental, Retail’ appear in blue text on a white background.)

“The way we set the DMO is that once a year we take a really close look at the costs in the electricity supply chain. So we build a cost stack model which means we’re looking at the cost of generating electricity, transporting it through poles and wires, selling it to customers and then we allow a profit margin on top of that.

(The female speaker appears again, against a white background.)

“We build that stack and that gives us the prices. We put those in place to take effect from the first of July each year and they stay constant for the entire year, for customers who are on standing offers.

(The words ‘DMO comes into effect 1 July each year” appear in blue text on a white background, alongside the female speaker.)

“When the DMO was first introduced it was really about getting some unreasonable prices under control, and it did that.”

(The words ‘Regions covered by the DMO – NSW, SA South-Eastern QLD” appear in blue text on a white background, alongside the female speaker.)

“In some ways its even more important when prices are rising because it makes sure they’re going up by no more than they absolutely need to.

“We’ll be using the DMO to make sure customers are protected, that they’re not paying more than they need to and that when prices come down, they come down at the right rate.

(The video ends with the AER logo on a blue, orange and white background.)

Transcript ends.

This video accompanied the release of the draft determination for the Default Market Offer 2023–24.