Australian households and small businesses across New South Wales, South East Queensland, South Australia, and Victoria are poised for relief on their electricity bills from July 1, 2026. The Australian Energy Regulator (AER) and Victoria’s Essential Services Commission (ESC) have both released their final determinations for the Default Market Offer (DMO) and Victorian Default Offer (VDO) respectively, confirming price reductions for most customers on standing offers.
The AER’s final DMO 2026-27, announced on May 26, 2026, indicates that electricity prices will fall for the majority of residential and all small business customers in NSW, South East Queensland, and South Australia. Simultaneously, the ESC’s final VDO 2026-27, released on May 20, 2026, will see average household bills in Victoria drop by 5% and small business bills by 6%. These decisions collectively mean that some small businesses could see annual savings of up to $241 in Victoria, while residential customers in NSW could save up to $211 annually, depending on their tariff type and distribution zone.
“This is a positive outcome with prices coming down for the majority of households and all small businesses across the three regions where the DMO safety net applies,” stated AER Chair Clare Savage. “The reductions compared to last year reflect easing cost pressures in parts of the electricity supply chain and addresses industry and consumer feedback to ensure prices remain fair and workable in practice.”
Default Market Offer (DMO) Reductions Across NSW, SE QLD, and SA
The AER’s DMO acts as a safety net, setting the maximum price retailers can charge customers on standing offers in NSW, South East Queensland, and South Australia. It also serves as a benchmark for market offers, influencing pricing across the broader retail electricity market.
From July 1, 2026, the DMO will deliver varied impacts across these states:
| State/Customer Type | Annual Change (Flat Rate) | Annual Change (Time-of-Use / Smart Meter) |
|---|---|---|
| NSW Residential | -3.4% to -5.0% (saving $66 to $137) | -3.7% to -7.7% (saving $72 to $211) |
| NSW Small Business | -9.0% to -11.3% (saving $432 to $705) | -9.4% to -20.9% (saving $449 to $1,303) |
| SE QLD Residential | -7.2% (saving $155) | -10.7% (saving $229) |
| SE QLD Small Business | -10.4% (saving $445) | -14.0% (saving $601) |
| SA Residential | +1.4% (increase of $33) | -1.1% (saving $25) |
| SA Small Business | -6.8% (saving $379) | -12.1% (saving $673) |
It is important to note that while most regions will see reductions, South Australian residential customers on flat rate standing offers will experience a modest 1.4% increase.
Victorian Default Offer (VDO) Brings Further Savings
Victoria, which operates under its own regulatory framework, also confirmed significant price drops. The ESC’s final VDO for 2026-27 will result in average annual bill reductions of 5% for households (approximately $84) and 6% for small businesses (approximately $241) from July 1, 2026.
These reductions are distributed across Victoria’s five network zones:
| Distributor (Victorian Households, Flat Rate) | 2025–26 VDO | 2026–27 VDO | Price Difference ($) | Price Difference (%) |
|---|---|---|---|---|
| AusNet | $1,908 | $1,748 | -$160 | -8% |
| CitiPower | $1,546 | $1,481 | -$65 | -4% |
| Jemena | $1,638 | $1,563 | -$75 | -5% |
| Powercor | $1,703 | $1,633 | -$70 | -4% |
| United Energy | $1,579 | $1,529 | -$50 | -3% |
| Average | $1,675 | $1,591 | -$84 | -5% |
The ESC emphasises that the VDO is designed as a simple, trusted, and reasonably priced electricity option to safeguard customers who may not actively engage with the electricity market.
Why Are Prices Falling?
The primary driver behind these widespread price reductions is the moderating cost of wholesale electricity. This is largely attributed to the increasing penetration of renewable energy sources, particularly wind and battery generation, into the National Electricity Market (NEM).
“Batteries have been displacing more expensive gas and hydro in the evenings, and we’ve just seen flatter prices through the whole day. That’s really translated to lower forward electricity contract prices.”
This shift has reduced the reliance on more expensive gas and hydro generation during peak demand periods, leading to lower electricity futures prices and reduced spot market volatility. Additionally, falling environmental scheme costs and a slight easing in retailer operating costs have contributed to the overall downward pressure on bills. While network costs remain a substantial component of electricity bills, accounting for 39% to 54% of typical DMO costs, the significant wholesale cost reductions have largely offset their upward pressure.
New Solar Sharer Offer for DMO Regions
For the first time, the AER’s DMO determination also includes the Solar Sharer Offer (SSO). This opt-in program, available from July 1, 2026, allows eligible households with smart meters in NSW, South East Queensland, and South Australia to access three hours of free electricity daily. The free power period is set from 11 am to 2 pm in NSW and South East Queensland, and 12 pm to 3 pm in South Australia.
AER Chair Clare Savage highlighted the potential: “The new solar sharer offer is an opportunity to make further savings if households can shift some of their electricity usage, such as washing machines, air conditioning, or electric vehicle charging, into the middle of the day.” This initiative encourages consumers to utilise electricity during periods of high solar generation, further optimising grid stability and potentially reducing individual bills.
What This Means for Australian Energy Consumers
While the DMO and VDO provide a crucial safety net and reference point, they are not always the cheapest available offers. Only a minority of customers remain on standing offers, with most already on market offers that typically provide greater discounts.
Energy consumers are strongly encouraged to review their current electricity plans and compare them against the new DMO and VDO reference prices. Switching providers or negotiating a better market offer could lead to further savings beyond these default reductions. For guidance on finding competitive rates, consider exploring resources like Best Electricity Plans in Australia 2026: A Comprehensive Guide for Households to Cut Costs or The Ultimate Guide to Switching Electricity Providers in Australia 2026: Save on Your Home Energy Bills. Households with smart meters should also investigate whether the new Solar Sharer Offer aligns with their energy usage patterns to maximise potential savings.
These final determinations signal a positive trend for Australian energy consumers, driven by evolving wholesale market dynamics and increased renewable energy integration. However, proactive engagement with the market remains key to securing the best possible energy deal. For broader support, refer to Navigating Australian Energy Bill Relief and Utility Costs in 2026: Your Essential Guide.