Retail electricity prices review - Determination of default market offer prices 2021-22

Sector: 
Segment: 
Status: 
Category: 
Retail pricing information
Date initiated: 
19 October 2020
Effective date: 
1 July 2021
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 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.

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

Position Paper

On 20 October 2020 we published our Position Paper on Default Market Offer prices for the 2021-22 year. We have instructed ACIL Allen Consulting to support us in updating the design of our forecasting approach for wholesale and environmental costs. A report, Default Market Offer 2021-22: Wholesale energy and environmental costs methodology paper for DMO 3, by ACIL Allen Consulting is published alongside the Position Paper.

Submissions

We invited written submissions on the Position Paper. Submissions closed Thursday 19 November 2020.

Stakeholder forum

As part of its consultation process the AER held an online stakeholder forum on 29 October 2020 to discuss key issues for the DMO 2021-22 price determination.