Cheaper Electricity Bills: Aussies Could Save $226 from July 1 | 2026-27 DMO Update
Australian households may see a reduction in their electricity bills starting July 1, as the Australian Energy Regulator (AER) proposes lower default electricity costs. The draft determination for energy default offers in 2026-27, released by the AER, will impact price caps in New South Wales, South East Queensland and South Australia. This potential easing of financial pressure comes as welcome news for many, particularly as cost-of-living concerns remain prominent.
How Much Could Households Save?
The AER’s proposed changes cover five electricity distribution networks across NSW, SE QLD, and SA. Savings will vary depending on location and network, but the regulator anticipates significant reductions for customers in Queensland and parts of New South Wales. Households connected to the Energex network in South East Queensland could save up to $216 per year, while those served by Essential Energy in NSW may see savings of up to $226 annually. These figures represent the potential maximum savings, and individual bills will depend on consumption patterns.
The AER attributes these proposed price drops to reductions in several key cost components that influence the DMO, including wholesale electricity prices, environmental costs, and retail operating expenses. Wholesale electricity prices, which represent a significant portion of the overall bill, have seen some stabilization after periods of volatility.
New Pricing Structures and Options
Beyond the overall price reductions, the AER is introducing several reforms designed to give consumers more control and transparency. A key change is the inclusion of time-of-use pricing in the DMO. This means that alongside the traditional flat rate, customers will also see an annual price based on when they use electricity, with peak and off-peak hours. For Energex, Essential, and SA Power Networks, the flat rate and time-of-use annual prices will be equivalent, but Ausgrid and Endeavour networks will have separate pricing for each tariff type. This aims to incentivize shifting energy usage to off-peak times, potentially lowering bills for those who can adjust their consumption habits. More information on peak and off-peak hours can be found at Canstar.
Regulators will also introduce capped prices for both usage rates (per kilowatt hour) and daily supply rates on standing offer plans. This represents intended to prevent customers from being charged excessively high rates, particularly during peak demand periods.
The Solar Sharer Offer: A New Option for Households
A potentially significant development is the introduction of the optional Solar Sharer Offer (SSO), available in NSW, SA, and SE QLD from July 1. This opt-in plan provides three hours of free electricity each day during the afternoon solar peak. Households can use up to 24 kilowatt hours (kWh) during this period without incurring usage charges. The free use periods vary by state:
- NSW: 11am-2pm AEDT, 11am-2pm AEST
- SE QLD: 11am-2pm year round
- SA: 12pm-3pm ACDT, 12-3pm ACST
Outside of the three-hour free period, SSO plans will have a daily supply charge and standard usage charges. Any electricity used exceeding 24kWh during the free period will be charged at either the off-peak rate (Ausgrid, Essential Energy, and Energex networks) or the solar soak charge (Endeavour Energy and SA Power Networks). All energy providers with at least 1,000 customers will be required to offer the default SSO alongside flat rate and time-of-use standing offers. The SSO is available to any household with a smart meter, meaning solar panels are not required to participate. Further details on the Solar Sharer Offer can be found here.
Understanding the Default Market Offer (DMO)
The DMO, also known as a standing offer or default offer, is a regulated electricity tariff available in NSW, SE QLD, and SA. As outlined by the Department of Climate Change, Energy, Efficiency and Water, it serves as a safety net for households who don’t actively shop around for a new electricity deal. It also acts as a reference price for comparing other plans. Currently, around 463,000 households, representing 7.8% of residential customers, are on a standing offer.
Victoria has its own equivalent, the Victorian Default Offer (VDO). The draft VDO for 2026, released earlier this month, also proposes lower standing offer prices across all five Victorian distribution networks.
Customers not on the DMO or VDO are typically on ‘market offers’ – plans with rates set by individual energy retailers, often including discounts and incentives. Market offers are generally more competitive than standing offers, and the DMO and VDO serve as benchmarks for comparison.
The DMO and VDO are revised annually, with new prices taking effect on July 1. However, even customers on market offers may feel the impact, as retailers often adjust their plans in response to the new default pricing.
New Consumer Protections
Alongside the pricing changes, regulators are implementing new consumer protection rules effective July 1. These include restrictions on how often retailers can increase prices on market offer contracts (no more than once per 12 months), preventing customers from being rolled onto plans exceeding the default price when their current benefits expire, and limiting unreasonably high late payment fees. Vulnerable customers will also be exempt from retail fees, and all network fees must reflect reasonable costs. These measures aim to provide greater fairness and transparency in the energy market.
What’s Next for Electricity Pricing?
The AER and ESC will finalize the default pricing in May. Regardless of whether you’re on a standing offer or a market offer, now is a good time to review your electricity plan and explore more competitive options. Customers who haven’t changed their plan in at least a year are particularly likely to benefit from switching. Checking your power bill will reveal your current plan and any potential ‘Better Offer’ messages from your retailer. The Australian Energy Regulator provides further information on default market offer prices for 2024-25 here.