For many Australians, the promise of falling wholesale electricity prices in 2026 hasn’t fully translated into significantly lower power bills. While the Default Market Offer (DMO) and Victorian Default Offer (VDO) have seen reductions for the 2026-27 financial year, your bill may still be high due to persistent fixed daily supply charges, the conclusion of universal federal energy relief, and the ‘loyalty tax’ – the premium paid by consumers who haven’t switched to more competitive market offers.
The End of Universal Federal Energy Bill Relief
A significant factor contributing to higher bills for many households in 2026 is the absence of the broad federal energy bill relief. The Australian Government’s Energy Bill Relief Fund, which provided up to $300 in 2024-25 and a further $150 in the first two quarters of 2025-26, concluded its universal payments on 31 December 2025. This means that from 1 January 2026, households no longer receive these automatic credits, and bills reflect full retail prices, often leading to a perceived increase even if underlying rates have stabilised or slightly decreased.
Targeted state and territory concessions for eligible cardholders and low-income households remain in place and are crucial for those who qualify. These ongoing programs are reviewed annually and continue to provide valuable support.
Default Market Offer (DMO) and Victorian Default Offer (VDO) Changes for 2026-27
The Default Market Offer (DMO), set by the Australian Energy Regulator (AER), is the maximum price retailers can charge residential and small business customers on standing offer contracts in New South Wales, South Australia, and South East Queensland. Victoria has its own equivalent, the Victorian Default Offer (VDO), set by the Essential Services Commission (ESC). These offers act as a safety net and a reference price for comparing market offers.
For the 2026-27 financial year, effective 1 July 2026, most DMO and VDO prices have seen reductions:
| Region | Residential Flat Rate Change (vs. 2025-26) | Residential Time-of-Use Change (vs. 2025-26) | Annual Impact (Residential Flat Rate) |
|---|---|---|---|
| New South Wales | -3.4% to -5.0% | -3.7% to -7.7% | -$66 to -$137 |
| South East QLD | -7.2% | -10.7% | -$155 |
| South Australia | +1.4% | -1.1% | +$33 |
| Victoria (VDO) | -5.0% (average) | -5.0% (average) | -$84 (average) |
Source: AER Final DMO 2026-27 Determination, ESC Final VDO 2026-27 Determination.
While these reductions are positive, particularly in NSW and SE Queensland, South Australian households on flat rate DMOs will experience a modest 1.4% increase, equating to about an extra $33 per year. Importantly, these are default prices. Most competitive market offers are typically priced below the DMO/VDO.
The Impact of Rising Fixed Daily Supply Charges
Even if usage rates decrease, a significant portion of your electricity bill is made up of fixed daily supply charges. These charges cover the cost of maintaining the electricity network and delivering power to your home, regardless of how much electricity you consume. In 2026, some retailers, including major players like AGL, Origin, and EnergyAustralia, have reportedly increased these fixed daily supply charges, in some cases by over 85%. This means that even if your per-kilowatt-hour (kWh) usage rate falls, a higher daily fixed charge can offset those savings, keeping your overall bill elevated.
“Customers have reported increases of over 85% to daily supply charges for the coming year for electricity plans.”
This trend can disproportionately affect low-energy consumers who might otherwise benefit most from reduced usage rates.
The ‘Loyalty Tax’: Are You Paying More Than You Should?
One of the most persistent reasons for high electricity bills in Australia is the ‘loyalty tax’. This refers to the higher prices paid by customers who remain on older, less competitive standing offers or outdated market offers rather than actively comparing and switching to a better deal.
Retailers are required to provide the DMO/VDO as a safety net, but they are also free to offer more competitive market offers with various discounts, incentives, and tariff structures. The Essential Services Commission (ESC) in Victoria noted that in May 2026, households on a flat rate tariff could pay 27% less than the VDO price by shopping around. This highlights the substantial savings available for engaged consumers. If you haven’t reviewed your electricity plan in the last 12-24 months, you are likely paying more than necessary.
For a comprehensive overview of how to get the most out of your energy plan, see our guide: Navigating Australia’s Energy Bill Relief and Support in 2026: A Comprehensive Guide
State-by-State Energy Relief and Rebates in 2026
While universal federal relief has ended, state governments continue to offer a range of targeted concessions and energy-saving upgrade programs:
- New South Wales: The NSW Home Energy Saver Program, launched 17 June 2026, provides zero-interest loans up to $15,000 for energy-saving upgrades like solar panels, batteries, and insulation. Lower-income households (under $80,000 combined income or concession card holders) can access a separate discount of up to $4,000 later in 2026. Ongoing rebates include the Low Income Household Rebate (up to $285/year), Seniors Energy Rebate ($200/year), and Family Energy Rebate (up to $180).
- Victoria: Eligible concession card holders can receive an ongoing Annual Electricity Concession of approximately $174/year. The Utility Relief Grant offers up to $1,300 for households experiencing hardship. The Victorian Energy Upgrades (VEU) program provides discounts on energy-efficient upgrades such as heat pump hot water systems (up to ~$1,400 from Solar Victoria, plus VEU discounts) and insulation (often 70-90% discount, potentially $0 upfront for priority households). Consider exploring Is a Gas to Electric Home Conversion Worth It in Australia 2026? Unlock $1,000s in Savings & Rebates for related savings.
- Queensland: The Queensland Electricity Rebate provides $386.34/year for eligible concession card holders. The Medical Cooling and Heating Electricity Concession Scheme offers $522.09/year for those with eligible medical conditions. The Home Energy Emergency Assistance Scheme can provide up to $720 every two years for households in short-term financial hardship.
- South Australia: The Retailer Energy Productivity Scheme (REPS) offers retailer-funded discounts on energy-efficient upgrades. Federal Small-scale Technology Certificates (STCs) provide an upfront discount on solar panels (up to 25%), and the federal Cheaper Home Batteries program offers around 30% off an eligible home battery system (approximately $3,700 for a 10 kWh battery). Eligible concession holders can also access the SA Concessions Energy Discount Offer (SACEDO) through Origin Energy, providing 20% off electricity usage and supply charges.
- Western Australia: The Energy Assistance Payment provides $326.33/year for concession card holders. The WA Residential Battery Scheme offers Synergy customers $130 per usable kWh up to $1,300 for a battery, which can be stacked with the federal battery rebate.
- Tasmania: Eligible low-income customers receive the Annual Electricity Concession, worth approximately $650 per household each year in 2026-27. Other concessions include a Heating Allowance ($56/year) and Medical Cooling or Heating Concession (~$513.70/year).
Leveraging New Opportunities: Solar Sharer Offer & Smart Meters
New opportunities are emerging to help manage electricity costs. The Solar Sharer Offer (SSO), introduced as part of DMO reforms and effective 1 July 2026, provides eligible households with smart meters in NSW, SA, and SE Queensland three hours of free electricity during the middle of the day. This free period is typically 11 am to 2 pm in NSW and SE QLD, and 12 pm to 3 pm in SA, capped at 24 kWh/day. This is an opt-in offer designed to encourage shifting energy use to periods of high solar generation, benefiting those who can run appliances like dishwashers, washing machines, or charge EVs during these hours.
Victoria is not part of the SSO but is launching its own Midday Power Saver plan on 1 October 2026, offering a similar three-hour free window between 11 am and 2 pm.
These offers can be particularly beneficial for households with electric vehicles or home batteries, allowing them to charge for free. For more on optimising your energy usage, read: Unlock $800+ Savings: Your Smart Meter Guide for Australia 2026
Bottom Line: Take Control of Your 2026 Electricity Bills
Despite some positive shifts in benchmark electricity prices for 2026-27, your electricity bill may still be high due to the end of universal federal relief and potentially rising fixed daily supply charges. The most effective way to combat high bills is to be an active energy consumer. Regularly compare electricity plans using government comparison websites like Energy Made Easy (for DMO regions) or Victorian Energy Compare (for Victoria) to ensure you’re on the most competitive market offer, rather than paying a ‘loyalty tax’ on outdated plans. Additionally, explore all available state-specific rebates and energy-efficiency upgrade programs, as these can provide hundreds or even thousands of dollars in annual savings or upfront discounts on installations.