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%.
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%
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, t+he Energy Regulated has squeezed the retail margin on the business DMO to bring this close to 6% margin that households. It’s 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.
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.