Default Market Offer (DMO) prices for 2025-2026 (DMO 7)

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AER’s final determination for retail electricity Default Market Offer (DMO) prices for 2025-2026 (DMO 7):

The DMO is a price cap set by the Australian Energy Regulator (AER) to protect consumers from excessively high electricity prices while ensuring retailers can recover their costs. The DMO applies in New South Wales (NSW), Southeast Queensland (SE Queensland), and South Australia for standing offer customers.

Key points:

 

  1. Standing offers provide a safety net for customers who have not engaged in the market or cannot easily switch providers.
  2. The DMO serves as a reference price for comparing other market offers from retailers in each region.
  3. Over 90% of households are on market offers, which are typically cheaper and more competitive than the DMO. These offers often include discounts and deals. While market offers provide cheaper alternatives for those willing to compare and switch, they can still be pricier than the DMO for customers who do not engage.
  4. Cost of living remains a significant concern for households and small businesses, influencing the DMO 7 pricing decisions. While inflation is easing, the AER emphasizes that it is still not enough evidence of significant cost relief for consumers.

Bill relief, rebates and concessions are offered by the Australian government. Consumers can identify what forms of assistance they may be eligible for at www.energy.gov.au/rebates.

Government comparison websites, Energy Made Easy and Victorian Energy Compare allow consumers to easily shop around for the best market offer.

DMO 7 Prices

 

New South Wales (NSW)

  • Residential (no controlled load): Up 8.5%–9.1% (6.1%–6.7% above forecast inflation)
  • Residential (with controlled load): Up 8.3%–9.7% (5.9%–7.3% above forecast inflation)
  • Small businesses: Up 7.9%–8.5% (5.5%–6.1% above forecast inflation)

Southeast Queensland (SE QLD)

  • Residential (no controlled load): Up 3.7% (1.3% above forecast inflation)
  • Residential (with controlled load): Up 0.5% (1.9% below forecast inflation)
  • Small businesses: Up 0.8% (1.6% below forecast inflation)

South Australia (SA)

  • Residential (no controlled load): Up 3.2% (0.8% above forecast inflation)
  • Residential (with controlled load): Up 2.3% (0.1% below forecast inflation)
  • Small businesses: Up 3.5% (1.1% above forecast inflation)

Key Drivers of Price Increases

  • Cost components: Increases across wholesale, network, and especially retail costs.
  • Retail costs: Although a smaller portion of total price, their rapid growth significantly impacted overall prices in certain regions.

 

DMO regulatory Framework

 

The DMO price applies to residential and small business customers on standing offers in NSW, SE Queensland, and South Australia, but not in ACT, Northern Territory, regional Queensland, Tasmania, Victoria, or Western Australia. These regions have their own maximum standing offer prices set by state or territory laws.

The Regulations require the determination of the following for small customers:

  • Model annual usage: The estimated annual electricity consumption and usage pattern for a typical customer in each distribution region.
  • DMO price: A reasonable total annual price for supplying electricity to small customers based on their model annual usage.

The DMO applies to:

  • Residential customers on flat rate or time of use (TOU) tariffs.
  • Residential customers with controlled load, for appliances like electric hot water systems or pool pumps.
  • Small business customers on flat rate tariffs.

The DMO does not apply to customers with demand charges, prepayment meters, or those in embedded networks served by an authorised retailer.

To determine the reasonable annual price, the Regulations require the AER to consider multiple factors:

  • Retailers’ electricity prices for small customers in the region.
  • The need for electricity retailers to make a reasonable profit.
  • Distribution, transmission, and wholesale electricity costs in the region.
  • Compliance costs with relevant laws.
  • Costs related to acquiring and retaining customers.
  • The cost of serving small customers.

The DMO also acts as a reference price that helps customers easily compare market offers, with the ACCC responsible for enforcing compliance. The mandatory industry code ensures that standing offer prices do not exceed the DMO, customers are informed about how prices compare to the DMO, and conditional discounts are clearly presented.

Standing Offer Customers

 

All customers have the right to choose a standing offer. Common reasons for being on a standing offer include:

  • Not having taken up a market offer since retail competition was introduced.
  • Being supplied under a retailer’s obligation (e.g., due to poor credit history).
  • Moving into a premises and receiving supply from the existing retailer but are yet to contact them.
  • Defaulting to a standing offer after a market contract expires.

Every retailer must offer a standing offer, which customers can request. For those with an existing connection, only their current retailer is required to provide this, to ensure the customer is protected by the DMO price cap.

To read more about the Default Market offer, head to: https://www.aer.gov.au/documents/aer-final-determination-default-market-offer-prices-2025-26-26-may-2025