For many Australian households, the question of why electricity bills remain stubbornly high in 2026 is a source of ongoing frustration. While the Australian Energy Regulator (AER) and the Essential Services Commission (ESC) in Victoria have announced some reductions to benchmark electricity prices for the 2026-27 financial year, the reality for many consumers is that their overall bills continue to climb. This apparent contradiction stems from a combination of factors, including the cessation of federal energy relief, significant increases in fixed daily supply charges, and the underlying dynamics of wholesale energy markets.
The End of Federal Relief and Rising Daily Charges
The primary reason many Australians are seeing higher net bills in 2026, despite some regulated price drops, is the conclusion of the Federal Energy Bill Relief Fund on 31 December 2025. This fund provided universal credits of up to $300 in 2024-25 and a further $150 (in two $75 instalments) for the first half of 2025-26. With this federal support no longer automatically applied, households are now facing the full retail price of electricity, making bills feel significantly higher than in previous years.
Compounding this is a trend of retailers increasing their fixed daily supply charges. These charges are a non-negotiable fee you pay simply for being connected to the electricity grid, regardless of how much power you use. Reports indicate that some retailers have increased these daily supply charges by between 25% and 80% from 1 July 2026, particularly affecting low-usage households, pensioners, and solar owners who rely on lower consumption charges for savings.
“Increasing the fixed daily supply charge by a large margin, in some cases reported across the industry at between 25% and 80%, appears to directly offset any benefit from the regulated price reduction, particularly for low-usage households, pensioners, and customers with solar systems who rely on lower consumption charges to see genuine savings.”
Default Market Offer (DMO) and Victorian Default Offer (VDO) in 2026-27
The Default Market Offer (DMO), set by the AER, acts as a price cap for standing offers in New South Wales, South East Queensland, and South Australia. Similarly, the Victorian Default Offer (VDO), set by the ESC, provides a safety net for standing offer customers in Victoria. These offers also serve as a reference price against which market offers are compared.
For the 2026-27 financial year, effective 1 July 2026 (or 1 August for some Victorian market contracts):
| Region | Residential Flat Rate DMO/VDO Change (Approx.) | Annual Impact (Approx.) | Key Drivers |
|---|---|---|---|
| New South Wales | Decreased by 3.4% to 5.0% | Savings of $66 to $137 | Lower wholesale electricity costs, reduced spot price volatility. |
| South East Queensland | Decreased by 7.2% | Savings of $155 | Lower wholesale electricity costs, increased wind and battery generation. |
| South Australia | Increased by 1.4% | Increase of $33 | Higher underlying cost stack, reliance on gas peakers. |
| Victoria | Decreased by an average of 5% | Savings of $84 | Lower environmental, wholesale, and network costs. |
Note: These figures are for customers on standing offers. Time-of-use DMO customers in NSW, SE QLD, and SA have also seen decreases.
While these regulated price drops are welcome, they primarily benefit the roughly 8% of households and 15% of small businesses still on standing offers. The vast majority of Australians are on market offers, which are set by retailers and can be priced above or below the DMO/VDO reference price.
The Influence of Wholesale Prices and Gas
Wholesale electricity prices, what retailers pay for power, ultimately dictate retail price trends. Australia’s National Electricity Market (NEM) saw significant volatility in late 2025 and early 2026, with average spot prices jumping from $48.98 per MWh in November 2025 to $152.25 per MWh in January 2026. This volatility is often linked to an ageing coal fleet and the cost of gas-fired generation.
However, in Q2 2026 (April-June), wholesale electricity prices across the NEM fell to six-year lows, averaging $74/MWh. This was largely attributed to a rapid rollout of home batteries (doubling to 9GW over the past year) and increased wind generation, coupled with milder weather. Victoria saw prices as low as $56/MWh, and NSW at $75/MWh. Despite these overall improvements, South Australia experienced some high wholesale prices in Q1 2026, reaching $144/MWh due to high demand and low wind.
Gas prices continue to be a significant driver of electricity costs. Even though gas provides only about 5% of electricity in the main grid, it often sets the wholesale price up to 90% of the time, especially during peak demand or when coal plants are offline. Global LNG market trends and domestic supply chain challenges have kept Australian gas prices elevated in 2026.
Hidden Costs and What to Look For
Beyond the headline rates, several ‘hidden’ costs can inflate your bill:
- Late Payment Fees: Missing a payment due date can incur charges, typically around $10 to $15 per overdue bill.
- Paper Bill Fees: Many retailers charge a fee (e.g., $1.50 to $2.50 per bill) for paper statements, encouraging digital billing.
- Payment Processing Fees: Using certain payment methods, like credit cards, can attract a surcharge of 0.5% to 1.5%.
- Exit Fees: Some fixed-term market offers may have early termination fees, although these are less common now.
- Solar Export Limitations: Decreasing solar feed-in tariffs (e.g., Momentum Energy’s NSW rate decreasing from 5c/kWh to 3c/kWh from 1 July 2026) mean you get less credit for exporting excess solar, reducing your potential bill savings.
What You Can Do to Reduce Your Bills in 2026
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Compare Market Offers Regularly: Don’t assume your current plan is the best. Retailers constantly introduce new market offers with discounts and incentives that can be significantly cheaper than standing offers. Use government comparison websites like Energy Made Easy (for NSW, QLD, SA, ACT, TAS) or Victorian Energy Compare (for VIC) to find the best deals for your specific usage and location.
To get started, explore our guide on Choosing Your Australian Energy Provider in 2026: A Definitive Guide.
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Check for State-Based Rebates and Concessions: While federal relief has ended, state and territory governments continue to offer targeted concessions for eligible households, including pensioners, low-income earners, and concession card holders. These can provide substantial annual savings, often ranging from $200 to $800+. For example, the ACT offers an Electricity, Gas and Water Rebate of $800/year for 2025-26.
Ensure you’re claiming all you’re entitled to with our guide: Australian Energy Rebates in 2026: Your State-by-State Guide After Federal Relief Ends.
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Consider the New Solar Sharer Offer: From 1 July 2026, a new opt-in Solar Sharer Offer (SSO) is available for smart meter households in DMO regions. This plan provides three hours of free electricity during the middle of the day (e.g., 11 am - 2 pm in NSW/SE QLD, 12 pm - 3 pm in SA). While some reports suggest retailers may require customers to move to more expensive plans to access it, shifting high-usage appliances (like washing machines, dishwashers, or EV charging) to this period could offer savings if the overall plan remains competitive.
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Invest in Energy Efficiency: Reducing your overall consumption is one of the most effective ways to lower bills. This includes:
- Improving home insulation and draught proofing.
- Using energy-efficient appliances (look for high star ratings).
- Optimising heating and cooling usage.
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Explore Solar and Battery Storage: With falling wholesale prices and increasing battery installations, solar and home battery systems are becoming increasingly attractive. Batteries allow you to store cheap daytime solar power for use during expensive evening peaks, significantly reducing reliance on the grid.
To understand the potential savings and available support, read our comprehensive guide: Best Home Batteries in Australia 2026: Models, Costs & Up To $7,500 Rebates.
Bottom Line
While benchmark electricity prices in most of the National Electricity Market have seen some reductions for the 2026-27 financial year, the cessation of federal energy relief and significant increases in daily supply charges mean many Australian households are still experiencing rising net electricity bills. The best course of action is to actively compare market offers from different retailers using government comparison websites. Additionally, ensure you are claiming all eligible state-based concessions and consider long-term investments in energy efficiency, solar power, and home battery storage to take greater control of your energy costs in a dynamic market. Staying informed and proactive is key to managing your household energy budget in 2026 and beyond.