Decision points to potential electricity price reductions across all regions
Households and small businesses on the Default Market Offer (DMO) could see lower electricity prices next financial year under the Australian Energy Regulator’s draft determination for 2026–27.
The draft decision proposes reductions in DMO prices across all regulated regions - New South Wales, South East Queensland and South Australia - driven largely by lower wholesale electricity costs and reduced environmental and retail operating costs.
If adopted in the final determination, DMO annual prices for residential customers would fall by between 1.3% and 10.1%, while small business prices would decrease by between 7.6% and 21.2%, depending on the region.
Download the DMO information kit for more details on proposed pricing
The DMO sets an efficiently priced safety-net for households and small businesses on standing offer electricity plans and acts as a reference price to help consumers compare market offers.
AER Chair Clare Savage said the proposed price reductions reflect easing electricity costs and a shift to an efficient price framework under new government regulations, but said the AER continues to closely monitor global energy market developments.
“This draft decision points to the potential for some welcome relief for households and small businesses after several years of rising energy costs following Russia’s invasion of Ukraine,” Ms Savage said.
“The reductions reflect easing costs across parts of the electricity supply chain, particularly wholesale energy where we’ve seen falling electricity contract prices, reduced spot price volatility, and increased output from wind and battery generation.
“Retailers have also reported lower retail operating costs, while reductions in the cost of environmental schemes have also had a positive impact on reducing prices.
“Recent government reforms mean we are now calculating the DMO using only efficient costs, including using the lowest network tariffs available to retailers.
“We’ve worked to ensure consumers have access to a trusted, fair, and reasonably priced Default Market Offer that, come 1 July, is locked in for the next 12 months, providing consumers who can’t or won’t shop around that important safety net.”
Under the AER’s draft decision:
- New South Wales: residential prices would decrease by 2.4% (-$58) to 8.2% (-$226), while small business prices would fall by 7.6% (-$379) to 21.2% (-$1,320) depending on the distribution zone.
- South East Queensland: residential prices would decrease by 10.1% (-$216), and small business prices by 12.8% (-$550).
- South Australia: residential prices would decrease by 1.3% (-$31), while small business prices would fall by 15.2% (-$845).
The AER’s draft DMO determination 2026-27 is now open for consultation for three weeks and there may be movements in the final price outcomes.
The AER will consider stakeholder feedback and updated market data before releasing its final decision by 26 May 2026, with the new DMO taking effect on 1 July 2026.
Introducing the Solar Sharer Offer
The draft determination also introduces the Solar Sharer Offer, a new opt-in electricity plan that includes three hours of free usage during the middle of the day to help households take advantage of abundant solar energy and lower total electricity system costs for all customers.
The free usage periods are set to be 11am to 2pm in New South Wales and South East Queensland, and 12pm to 3pm in South Australia.
The Solar Sharer Offer has the same annual cost as the DMO Time of Use tariff but with free energy in the middle of the day and slightly higher prices (1 to 4 cents/kWh) in other parts of the day.
Customers who use electricity at roughly the same times of the day as the average customer, will be no worse off on the Solar Sharer Offer than the DMO Time of Use tariff. However, if those customers can shift some electricity use into the middle of the day, such as running appliances or charging electric vehicles, they will be able to reduce their bills.
Calm but cautious approach to global events
Ms Savage said the AER remains cautious about global events, particularly in the Middle East, and how they can influence energy markets in the lead up to the final decision.
“While Australia continues to invest in new sources of renewable energy, our electricity system remains significantly exposed to the international price of fossil fuels such as coal and gas.
“The wholesale cost of electricity, included in this draft decision, was calculated prior to the commencement of the current conflict in the Middle East. Since the conflict began, we have seen increases in the price of forward wholesale electricity contracts for 2026-27. However, even at these recent elevated levels, these forward contracts are still currently lower than last year, and well below the levels seen during the 2022 energy market events.
“We will continue to monitor this closely before making our final determination of the Default Market Offer in May.”
Shop around for a better deal
Ms Savage said the overall message to consumers remains to shop around for a better deal than the DMO.
“The Default Market Offer may not be the cheapest electricity plan available, but it provides a fair and reasonable option for someone who hasn’t or doesn’t want to engage in the market,” she said.
“With prices coming down, it is also important to check that any competitive offer you may be on currently remains the best one for you. Staying on an old offer past 1 July could mean you are paying more than necessary.”
Fewer than 10% of households and about 15% of small businesses remain on a DMO.
Recent retail data indicates some customers on the DMO could save up to 13% by moving to a mid-market offer in their region. Retailers are also required to tell their customers at least once every 100 days if they could offer them a better plan.
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