The Australian Energy Regulator’s (AER) Default Market Offer (DMO) announcement has delivered some welcome news for energy customers in New South Wales, South East Queensland and South Australia.
From July 1, the 2026–27 DMO electricity price will apply. The benchmark power price is falling across every region covered by the DMO with the exception of a small 1.4% increase in SA. All up it’s a sharp contrast to the steep increases consumers experienced over recent years.
The Default Market Offer (DMO) is the electricity price cap set by the AER for customers on Standing Offers — these are consumers who haven’t chosen a market energy plan or are unable to actively shop around.
The DMO applies in:
- New South Wales
- South East Queensland
- South Australia
(Victoria operates its own separate Victorian Default Offer – and it’s similar story will small fall in power prices.)
The DMO serves two important purposes:
- It protects disengaged customers from excessively high pricing. Today, about 8% of households (463,013 customers) remain on the DMO, while around 15% of small businesses (76,590 customers) are still on Standing Offers (aka DMO).
- It serves as the Reference Price for comparing all market energy offers. When retailers advertise that a plan is “10% less than the reference price”, the DMO is the benchmark they are comparing against.
How Much Are Prices Falling?
The AER announced the following changes for 2026–27:
For households on a flat rate standing offer, prices will fall by between 3.4% and 5.0% in New South Wales and by 7.2% in South East Queensland compared to last year, while South Australian households will have a modest increase of 1.4%.
Not everyones set to be a winner.
The 2026-27 DMO will impact small and large energy users differently. That’s because the AER has now changed how they set the regulated price. Previously, the AER set an annual cap, and retailers were free to adjust the balance between fixed supply and variable usage rates. Now, the AER has explicitly set each rate of anytime and time of use tariffs. The tariff design that will apply from July 1 has been significantly rebalanced – with greater emphasis on fixed daily supply charges, and comparatively lower usage rates.
Expect big jumps in the daily supply charges – 30% or more for many customers. On the other hand, energy users should see falls in usage costs. This will hit customers differently;
- Low-usage customers with modest consumption will get less benefit from lower usage rates because fixed charges make up a larger share of their bill. So they will feel the increased supply charge.
- Higher-usage customers stand to gain more savings from lower usage charges. This should more than offset increased daily supply costs.
Better for business
Small businesses will see reductions across all three DMO regions. Electricity prices are decreasing from 6.8% to 12.1% in South Australia, 10.4% to 14.0% in South East Queensland, and 9.0% to 20.9% in New South Wales, depending on whether their standing offer uses a flat rate or time of use tariff. The extra drop in small business prices is related to the Regulator squeezing retailer margins to bring this in line with household customers. There’s also extra opportunities for businesses on Time of Use tariffs, which well cover below.
2026-27 DMO Electricity Price by network – Anytime tariff
| Distribution zone | Residential | Small business |
| Ausgrid (NSW) | $1,899 (3,900 kWh) | $4,523 (10,000 kWh) |
| Change vs 25-26 | -$66 (-3.4%) | -$454 (-9.1%) |
| Endeavour (NSW) | $2,328 (4,900 kWh) | $4,343 (10,000 kWh) |
| Change vs 25-26 | -$83 (-3.4%) | -$432 (-9.0%) |
| Essential (NSW) | $2,604 (4,600 kWh) | $5,517 (10,000 kWh) |
| Change vs 25-26 | -$137 (-5.0%) | -$705 (-11.3%) |
| Energex (SE QLD) | $1,988 (4,600 kWh) | $3,849 (10,000 kWh) |
| Change vs 25-26 | -$155 (-7.2%) | -$445 (-10.4%) |
| SA Power (SA) | $2,334 (4,000 kWh) | $5,162 (10,000 kWh) |
| Change vs 25-26 | +$33 (+1.4%) | -$379 (-6.8%) |
Why Are Electricity Prices Falling?
The DMO is effectively the AER’s estimate of what an efficiently priced electricity plan should cost.
To calculate it, the regulator analyses all the major cost components involved in supplying electricity.
Depending on the region, the bill is roughly made up of:
- Wholesale electricity costs: 32%–44%
- Network costs: 39%–48%
- Retail costs: 7%–16%&
- Environmental scheme costs: 2%–3%
That breakdown highlights an important reality:
Despite much of the public frustration being directed toward retailers, retailer costs make up only a relatively small portion of the final bill.
The Main Drivers Behind Lower Prices
The two biggest contributors to lower DMO prices this year are falling wholesale costs and reduced retail operating costs.
1. Wholesale Electricity Costs Have Stabilised
Wholesale electricity costs have fallen between 3% and 12% across regions since July 2025 due to fewer extreme price spike events and increased renewables in the grid.
Batteries are helping to crush everyone’s costs.
An increase in utility scale storage and the surge of home batteries last year is making a real impact on prices. Expensive
gas-fired generation declined to the lowest quarterly average since the year 2000. This is set to continue, and over time batteries will flatten everyone’s peak electricity prices!
A more stable grid means lower average energy costs.
2. Retail Costs Have Fallen
Retailers also reported lower costs. Furthermore, the Energy Regulated has squeezed the retail margin on the business DMO to bring this close to 6% margin for residential customers. These improvements are a one-time deal, but welcome!
But Network Costs Keep Rising
While wholesale costs are easing, network costs continue to climb.
This includes:
- major high-voltage transmission lines
- and ongoing investment by electricity networks.
These network charges now account for the largest share of many electricity bills.
But, unlike wholesale costs, network pricing pressure is unlikely to reverse any time soon.
When governments privatised electricity networks, they effectively sold the rights to a revenue stream — meaning energy consumers will continue funding expanding network infrastructure for decades to come.
The bump in fixed charges
The big jump in the fixed supply charges that the AER has desgined in this years DMO will effectively protect networks (and retailers too) from the increasing number of consumers with battery and solar who are able to buy less from the grid. These customers have responded to increasing power prices and invested to reduce their electricity usage. So they’ll be frustrated with this shift, as there’s no getting away from fixed charges (without disconnecting from the grid, which in time, some may do!)
What Does This Mean for Households
For most households, the DMO decrease is a reassuring sign rather than a source of major bill reductions.
The DMO is often the “canary in the coal mine” for broader electricity pricing trends. Falling benchmark prices suggest:
- the worst of recent price shocks may be behind us,
- and July price changes are unlikely to produce major bill increases.
However, households shouldn’t expect dramatic savings automatically.
Competitive market offers operate on much tighter margins than the DMO. This means retailers have less room to pass through the savings that apply to the move expensive DMO offer.
The AER estimates that customers currently on the DMO could still save up to 13% by switching to a mid-market offer in their area. They’d save even more by shopping for leading market deals (up to 28% in some locations based on WATTever’s offer database)!
Compare and save
Finding a better deal starts with comparing all retailers’ current offers to your current energy plans and making a change. Once you know the best deals, you can ask your current retailer to improve your offer or switch to a cheaper retailer. You can start your comprehensive comparison here with WATTever.