Overview

Type
Sector
Electricity
Segment
Retail
Region
New South Wales
Queensland
South Australia
Status
Open
Effective date
Categories
Retail pricing information
AER reference
64687

The Default market offer (DMO) came into effect on 1 July 2019. The DMO is a maximum price that retailers can charge electricity customers on default contracts known as standing offer contracts. A customer may be on a standing offer for several reasons – such as, if they have never switched to a retailer’s market offer, or have defaulted to a standing offer at the end of their market offer benefit period.

The Competition and Consumer (Industry Code – Electricity Retail) Regulations 2019 sets out the legislative framework for the DMO.

The DMO applies to small business and residential customers in areas where there is no other retail price regulation (South Australia, New South Wales and south-east Queensland). The DMO price for each area also acts as a ‘reference price’ for residential and small business offers in that area. When advertising or promoting offer pricing, retailers must show the price of their offer in comparison to the DMO/reference price. This helps customers more simply compare the price of different offers.

The AER’s role is to determine the DMO price each year. This is the sixth time we will determine DMO price. As such we refer to the DMO for 2024–25 as ‘DMO 6’.

Issues paper

On 5 October 2023 we released the issues paper for DMO 6 and have published the 22 submissions received from stakeholders. As part of the consultation process, an online public forum took place on 27 October 2023 to present on and discuss topics from the issues paper. This was attended by approximately 80 guests.

Draft determination

On 19 March 2024 the AER released the DMO 6 draft determination. Stakeholders are invited to provide submissions by close of business, Tuesday, 9 April 2024. 

ACIL Allen Consulting supported the AER in the design of a forecasting approach for wholesale and environmental costs. The report Default Market Offer: Wholesale energy and environmental costs estimates for DMO 6 Draft determination by ACIL Allen Consulting was published alongside the draft determination.

We also requested ACIL Allen Consulting produce a long run marginal cost (LRMC) estimate for South Australia for use as a comparative data point against our current forecasting approach for wholesale costs. The report Default Market Offer: LRMC estimates for South Australia by ACIL Allen Consulting was published alongside the draft determination.

Additionally, ACIL Allen Consulting supported the AER in the approach for the retail margin. The report Default Market Offer: Methodologies for estimating the retail allowance and estimated values by ACIL Allen Consulting was published alongside the draft determination.