Households and small businesses could see their electricity bills fall from 1 July 2026, with the Australian Energy Regulator (AER) proposing price cuts across all Default Market Offer (DMO) regions in its draft determination for 2026–27.
The draft decision outlines anticipated reductions in DMO prices for New South Wales, South East Queensland, and South Australia, largely driven by easing wholesale electricity costs, lower environmental charges, and reduced retail operating expenses.
If confirmed, the new DMO would deliver residential price reductions of between 1.3 per cent and 10.1 per cent, and small business cuts of between 7.6 per cent and 21.2 per cent, depending on the region.
The DMO acts as a benchmark “safety-net” for customers on standing offer plans and provides a reference point for comparing market offers.
AER Chair Clare Savage said the proposed price drops mark a shift after several years of rising energy costs.
“This draft decision points to the potential for some welcome relief for households and small businesses after several years of rising energy costs following Russia’s invasion of Ukraine,” Savage said.
“The reductions reflect easing costs across parts of the electricity supply chain, particularly wholesale energy, where we’ve seen falling electricity contract prices, reduced spot price volatility, and increased output from wind and battery generation.
“Retailers have also reported lower retail operating costs, while reductions in the cost of environmental schemes have also had a positive impact on reducing prices.
“Recent government reforms mean we are now calculating the DMO using only efficient costs, including using the lowest network tariffs available to retailers.
“We’ve worked to ensure consumers have access to a trusted, fair, and reasonably priced DMO that, come 1 July, is locked in for the next 12 months, providing consumers who can’t or won’t shop around that important safety net.”
Under the draft decision, New South Wales households could see bills decrease by 2.4 per cent (-$58) to 8.2 per cent (-$226), and small businesses by 7.6 per cent (-$379) to 21.2 per cent (-$1,320), depending on their distribution area.
In South East Queensland, residential bills are set to drop by 10.1 per cent (-$216) and small business costs by 12.8 per cent (-$550).
South Australian households could save 1.3 per cent (-$31), while small businesses may see a 15.2 per cent (-$845) decrease.
The AER’s draft determination also introduces a new “Solar Sharer Offer” — an opt-in plan that offers three hours of free electricity use in the middle of the day to encourage use of abundant daytime solar power and reduce system-wide costs.
The free periods are set from 11am to 2pm in New South Wales and South East Queensland, and 12pm to 3pm in South Australia.
While consumers are expected to benefit, Ms Savage cautioned that global events remain a source of uncertainty.
“While Australia continues to invest in new sources of renewable energy, our electricity system remains significantly exposed to the international price of fossil fuels such as coal and gas,” she said.
She added that although recent Middle East tensions have pushed wholesale contract prices up slightly, they remain well below the highs of the 2022 energy market events.
“We will continue to monitor this closely before making our final determination of the Default Market Offer in May.”
Savage also reminded consumers to compare energy deals.
“The DMO may not be the cheapest electricity plan available, but it provides a fair and reasonable option for someone who hasn’t or doesn’t want to engage in the market,” she said.
The AER is now seeking feedback on the draft decision, with final DMO prices to be announced by 26 May 2026 and taking effect from 1 July 2026.
