Retail electricity prices review - Determination of default market offer prices 2020-21

Sector: 
Segment: 
Status: 
Category: 
Retail pricing information
Date initiated: 
19 September 2019
Effective date: 
30 April 2020
Contact: 
General enquiries - Default Market Offer DMO@aer.gov.au

Overview

The Default Market Offer (DMO) came into effect on 1 July 2019. The DMO is a new rule that limits the price that retailers can charge electricity customers on default contracts, known as standing offer contracts. The AER’s role is to determine the maximum price that a retailer can charge a standing offer customer each year.

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.

On 19 September 2019, we published our Position Paper as the first step in our process to determine the maximum DMO price for standing offer customers for the 2020-21 year. As part of the consultation process we held a stakeholder forum. We discussed the key issues raised by stakeholders in response to the Position Paper in order to inform the development of our Draft Determination. This forum was held on Tuesday, 26 November 2019 in Sydney.

On 10 February 2020 we published our Draft Determination as the second step in our process to determine the maximum DMO price for standing offer customers for the 2020-21 year. On 2 March 2020 we released our model for calculating DMO prices for 2020-21. The information contained in the model is already set out in the DMO 2020-21 Draft Determination. As part of our consultation on the Draft Determination we held a webinar on the key points of our Draft Determination, on 2 March 2020. Participants also submitted written questions which were answered during the session. In response to stakeholder requests, we have published ACIL Allen’s modelling data for the cost of energy on 12 March 2020. On 1 April 2020, we released a letter seeking stakeholder views on COVID-19 impacts we should take into account in making our DMO determination for 2020-21.

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

Final determination

On 30 April 2020 we published our Final Determination on Default Market Offer prices for the 2020-21 year. We have also published our model and the ACIL Allen consultant report alongside our decision.