Australian households and small businesses could see some relief on their electricity bills from 1 July 2026, as both the Australian Energy Regulator (AER) and Victoria’s Essential Services Commission (ESC) have released draft determinations proposing significant price reductions for the 2026-27 financial year. These announcements, with consultation periods concluding this week, signal a potential shift after several years of rising energy costs, driven largely by easing wholesale electricity prices and new policy initiatives aimed at leveraging Australia’s abundant solar generation.
AER Draft Default Market Offer 2026-27: Widespread Reductions Proposed
On 19 March 2026, the AER released its draft Default Market Offer (DMO) for 2026-27, indicating potential electricity price reductions across New South Wales, South East Queensland, and South Australia. The DMO serves as a safety net for customers on standing offers and acts as a reference price for comparing market offers. The proposed cuts are largely attributed to lower wholesale electricity costs, reduced environmental scheme expenses, and decreased retail operating costs.
Under the AER’s draft decision, residential customers could see annual DMO prices fall by between 1.3% and 10.1%, depending on their region and distribution zone. Small businesses are slated for even more substantial decreases, ranging from 7.6% to 21.2% annually.
“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,” stated AER Chair Clare Savage.
Specific proposed annual savings for residential customers on a flat tariff, without a controlled load, include:
| State/Distributor | Current Annual Price | Draft 2026-27 Price | Change (AUD) | Change (%) |
|---|---|---|---|---|
| NSW - Ausgrid | A$1,965 | A$1,875 | -A$90 | -4.6% |
| NSW - Endeavour Energy | A$2,411 | A$2,347 | -A$64 | -2.7% |
| NSW - Essential Energy | A$2,741 | A$2,515 | -A$226 | -8.2% |
| SE QLD - Energex | A$2,143 | A$1,927 | -A$216 | -10.1% |
| SA - SA Power Networks | A$2,301 | A$2,270 | -A$31 | -1.3% |
The AER’s consultation on the draft DMO closed on 9 April 2026, with the final determination expected by 26 May 2026. The new DMO prices will take effect from 1 July 2026.
Victoria’s VDO Draft: Lower Bills and a ‘Solar Soak’ Tariff
Meanwhile, Victoria’s energy regulator, the Essential Services Commission (ESC), released its draft Victorian Default Offer (VDO) for 2026-27 on 12 March 2026. The VDO, which acts as a benchmark for Victorian electricity prices, proposes an average annual bill reduction of A$46 for domestic customers and A$172 for small businesses.
The primary driver for these proposed reductions is a significant drop in environmental costs, with the cost for a typical domestic customer to cover environmental schemes plummeting from A$114 in 2025-26 to just A$67 in the 2026-27 draft – a 41% reduction.
A notable new initiative within the Victorian draft is the introduction of a new three-period residential time-of-use tariff structure, featuring a “solar soak” window. This period, typically from 11 am to 4 pm daily, will offer lower network charges to encourage households to shift their electricity use to when solar generation is at its peak.
| Victorian Distributor | Current Annual Price | Proposed 2026-27 Price | Change (AUD) | Change (%) |
|---|---|---|---|---|
| AusNet | A$1,908 | A$1,863 | -A$45 | -2% |
| CitiPower | A$1,546 | A$1,500 | -A$46 | -3% |
| Jemena | A$1,638 | A$1,592 | -A$46 | -3% |
| Powercor | A$1,703 | A$1,655 | -A$48 | -3% |
| United Energy | A$1,579 | A$1,536 | -A$43 | -3% |
Prices are estimates for an average household using 4,000 kWh/yr on a flat tariff on the default offer.
The ESC sought feedback on its draft decision until 10 April 2026, with the final determination expected in May and new prices applicable from 1 July 2026.
The Rise of the Solar Sharer Offer
Beyond the general price adjustments, the Australian Government’s new Solar Sharer Offer (SSO) is set to become an opt-in DMO option from 1 July 2026 in NSW, South Australia, and South East Queensland. Announced in November 2025 and refined in March 2026, the SSO will require retailers to offer households with smart meters at least three hours of free electricity in the middle of the day.
This initiative aims to allow customers to access up to 24 kWh of free electricity during this daily window, helping to cut power bills by encouraging energy use when solar generation is abundant. Critically, this offer will be available to both homeowners and renters, even if they don’t have rooftop solar panels, promoting more efficient grid operation.
What This Means for Your Bills and Energy Habits
While these draft determinations offer a positive outlook for many, it’s crucial for consumers to understand that the DMO and VDO are safety nets. More competitive market offers are often available. The AER has consistently advised consumers to shop around, noting that between 90% to 95% of competitive market offers are typically below the current DMO price.
Households should actively compare plans from different retailers to secure the best deal. The upcoming changes, particularly the “solar soak” and Solar Sharer Offers, also highlight the growing importance of understanding time-of-use tariffs and shifting energy consumption where possible. Running high-energy appliances like dishwashers, washing machines, or pool pumps during these free or cheaper daytime periods could lead to significant savings. For those considering home improvements, exploring options like Are Heat Pump Hot Water Systems Worth It in Australia 2026? A Guide to Costs, Savings & State Rebates or improving insulation Draught-Proofing vs. a New Heater vs. Solar Panels: Best ROI for Cutting Your Australian Winter Energy Bills in 2026 can further reduce reliance on the grid during peak pricing periods. Additionally, for Queensland residents, understanding Queensland Battery Rebates 2026: STCs, Solar Batteries & VPPs - Stag Electrical (though the article name is different, the content is relevant) can further leverage solar investments.
The final decisions from both regulators in May will confirm the exact price changes for millions of Australians, setting the stage for the new financial year’s energy landscape.
Broader Market Context: Volatility Remains
Despite the proposed retail price reductions, the broader energy market remains dynamic. A recent April 2026 energy market update noted that electricity futures rose sharply through late March before easing and recovering again into April, influenced by global fuel prices and Middle East tensions.
However, the AER has indicated that wholesale electricity contract price decreases for 2026-27 reflect a “lack of spot price volatility observed since June 2025,” with increased output from wind and battery generators reducing reliance on gas and hydro during evening peaks.
Consumers are encouraged to stay informed and proactive in managing their energy consumption and plans as Australia continues its transition to a more renewable-heavy grid.