Households and Small Businesses Could See Welcome Bill Relief from July

Hundreds of thousands of Australian households and small businesses across the eastern states are in line for a welcome reduction in their electricity bills from 1 July 2026. The Australian Energy Regulator (AER) has released its draft determination for the 2026-27 Default Market Offer (DMO), flagging potential price drops of up to 10.1% for residential customers and over 21% for some small businesses.

The proposed cuts apply to customers on standing offer contracts in New South Wales, South East Queensland, and South Australia. The DMO acts as a crucial price safety net for those who haven’t engaged with the retail market, and also serves as a benchmark reference price that all retailers must use when advertising their market offers.

AER Chair Clare Savage said the potential reductions offer a spot of good news after years of rising 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,” Ms Savage stated.

Diving into the Proposed Price Reductions

Under the AER’s draft proposal, the savings will vary depending on location and distribution network.

For residential customers, the annual decreases could be significant:

  • South East Queensland: A potential fall of 10.1%, which could save a typical household around $216.
  • New South Wales: Reductions range from 2.4% (a $58 saving for Ausgrid customers) to 8.2% (a $226 saving for Essential Energy customers).
  • South Australia: A more modest decrease of 1.3% is proposed, equating to a saving of about $31 for customers on the SA Power Networks.

Small businesses stand to gain even more substantial relief:

  • New South Wales: Price falls are proposed to be between 7.6% (saving $379) and 21.2% (saving $1,320) depending on the zone.
  • South East Queensland: A proposed decrease of 12.8% could save businesses approximately $550.

The regulator attributes the potential price drop primarily to falling wholesale electricity costs, driven by a combination of factors including increased generation from wind and batteries and reduced price volatility in the spot market.

Why Are Prices Tipped to Fall?

The primary driver for the proposed DMO reduction is the easing of wholesale electricity prices, which make up a significant portion of a customer’s final bill. The AER has observed falling electricity contract prices and a more stable spot market, influenced by the growing contribution of renewable energy sources.

“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,” Ms Savage explained.

Beyond wholesale costs, the regulator also noted that retailers have reported lower operating costs, and costs associated with environmental schemes have also decreased, contributing to the downward pressure on the final price cap.

Next Steps and What This Means for You

It is important to note this is a draft determination. The AER has invited submissions from stakeholders, which are due by 9 April 2026. The regulator will consider this feedback and updated market data before releasing its final, binding decision by 26 May 2026.

If the draft is adopted, the new, lower DMO prices will take effect on 1 July 2026, and remain in place for 12 months. While the news is most relevant for those on standing offers, all consumers can benefit. The DMO provides a clear benchmark, making it easier to compare different market offers and find a better deal. Consumers are encouraged to visit the AER’s free and independent comparison website, Energy Made Easy, to see how their current plan stacks up against the reference price.