First introduced by energy regulators as a response to the Australian Competition and Consumer Commission’s (ACCC) inquiry into electricity prices, the ‘Default Market Offer (DMO) serves as a price cap for electricity on standing offer contracts.
While some see this as a great way to lower power bills, others remain concerned that it’s a shift towards price re-regulation in a way that will restrict competition in the market. Either way, the Default Market Offer has had an impact on the price of electricity and the way consumers shop around for better deals.
With that in mind, Canstar Blue have created this guide to explain how the DMO works.
On this page:
- What is the ‘Default Market Offer’?
- How does the Default Market Offer work?
- Electricity plans cheaper than the Default Market Offer
- Why was the Default Market Offer introduced?
- What’s the difference between the Default Market Offer and a standing offer?
- How much does the Default Market Offer cost?
- Am I affected by the Default Market Offer?
- Are there other ways to save on electricity?
What is the Default Market Offer?
The Default Market Offer is an electricity tariff set by the Australian Energy Regulator (AER), which effectively serves as a price cap for energy retailers in New South Wales, South East Queensland and South Australia. Five years on from its introduction, electricity retailers can still technically charge more than the DMO on their market offers, but many prefer not to. The DMO acts as a ‘reference price’ from which all market offers must be compared to.
The DMO is basically a safety net price for electricity consumers who don’t engage in the energy market. It helps to ensure that loyal customers who stick with their electricity retailer are not exploited by expensive standing offers once the terms of their original energy deal come to an end.
It’s important to understand that the DMO is not designed to be a competitive price for energy, and the best deals may still be hundreds of dollars a year cheaper. This differs slightly to the Victorian Default Offer, which is designed to be a competitive deal.
How does the Default Market Offer work?
According to the AER, the price of the DMO is based on ‘the efficient cost of operating in the region, including a reasonable margin, as well as customer acquisition and retention costs’. Electricity retailers must advertise clear and concise conditions of each plan on their websites, referring to the DMO as a point of reference.
These rule changes came after the publication of the ACCC’s Retail Electricity Price Inquiry report, which found that the electricity retail market was confusing and too hard for consumers to shop for a better deal. The report also identified that customers choosing to stay with the same retailer were being hit with a ‘loyalty tax’ through non-discounted standing offer rates.
Customers who were on a standing offer pre-July 1, 2019 were moved onto the new default reference price. The reference price is set by the AER and is based on specific electricity usage and supply charges in different areas, meaning the reference price will vary between states and distribution networks.
Electricity plans cheaper than the Default Market Offer
To help find a better price, the tables below feature some of the cheapest prices in Canstar Blue’s database compared to the DMO.
Plans cheaper than the Default Market Offer in New South Wales
Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Ausgrid network in Sydney but prices may vary depending on your circumstances. This comparison assumes general energy usage of 3911kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision. The next three tabs feature products exclusively from AGL, EnergyAustralia and Origin.
Here are the AGL Energy plans on our database for NSW. These are products from a referral partner†. These costs are based on the Ausgrid network in Sydney but prices may vary depending on your circumstances. This comparison assumes general energy usage of 3911kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Here are the EnergyAustralia plans on our database for NSW. These are products from a referral partner†. These costs are based on the Ausgrid network in Sydney but prices may vary depending on your circumstances. This comparison assumes general energy usage of 3911kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Here are the Origin Energy plans on our database for NSW. These are products from a referral partner†. These costs are based on the Ausgrid network in Sydney but prices may vary depending on your circumstances. This comparison assumes general energy usage of 3911kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Plans cheaper than the Default Market Offer in South East Queensland
Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Energex network in Brisbane but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4613kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision. The next three tabs feature products exclusively from AGL, EnergyAustralia and Origin.
Here are the AGL Energy plans on our database for SEQ. These are products from a referral partner†. These costs are based on the Energex energy network in Brisbane but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4613kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Here are the EnergyAustralia plans on our database for SEQ. These are products from a referral partner†. These costs are based on the Energex network in Brisbane but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4613kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Here are the Origin Energy plans on our database for SEQ. These are products from a referral partner†. These costs are based on the Energex network in Brisbane but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4613kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Plans cheaper than the Default Market Offer in South Australia
Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the SA Power network in Adelaide but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4011kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision. The next three tabs feature products exclusively from AGL, EnergyAustralia and Origin.
Here are the AGL Energy plans on our database for South Australia. These are products from a referral partner†. These costs are based on the SA Power network in Adelaide but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4011kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Here are the EnergyAustralia plans on our database for South Australia. These are products from a referral partner†. These costs are based on the SA Power network in Adelaide but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4011kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Here are the Origin Energy plans on our database for South Australia. These are products from a referral partner†. These costs are based on the SA Power network in Adelaide but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4011kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Why was the Default Market Offer introduced?
Traditionally, customers have had a choice between two types of electricity contracts – standing offers and market offers. Market offers are set by energy retailers and often include discounts and incentives for customers. Standing offers are basic electricity deals with no discounts. Standing offers are generally more expensive than market offers, and are only intended to be used as the fallback option once a customer’s original electricity deal lapses.
Prior to the DMO, electricity retailers were supposed to contact customers before their market offer ended. However, many Australian households were being left on standing offers, inadvertently paying much more for electricity. Depending on the state and distribution network, some customers were paying hundreds more on their annual power bills.
What’s the difference between the DMO and a standing offer?
The Default Market Offer is similar to standing offers, except that the DMO is regulated by the government and is generally lower than previous standing offer prices. Electricity customers not signed up to market offers may still receive a ‘fair’ deal on electricity, the DMO also makes it harder for retailers to exploit loyal customers.
As for the ‘reference price’, it acts as a shared benchmark, providing clarity to electricity price comparisons. Retailers must now calculate all conditional discounts on their energy plans in accordance with the reference price. This addresses the issue of large and potentially misleading discounts that may actually hide inflated electricity rates.
How much does the Default Market Offer cost?
Although the energy market has been extremely volatile over the past 24 months, the Default Market Offer has traditionally protected customers from paying exploitatively high prices.
Below is a list of the final determination prices for the DMO in 2023-24, as per the Australian Energy Regulator. The DMO prices for 2024-25 will be confirmed in May 2024, but the draft determination is available here.
| Distribution Network | Residential Single Rate Tariff | Price Change 2022-2023 |
|---|---|---|
| Ausgrid (NSW) | $1,827 (3911kWh/year) | +$315 (20.4%) |
| Endeavor (NSW) | $2,228 (4913kWh/year) | +$392 (21.35%) |
| Essential (NSW) | $2,527 (4613kWh/year) | +$435 (20.79%) |
| Energex (QLD) | $1,969 (4613kWh/year) | +$349 (21.54%) |
| SA Power (SA) | $2,279 (4011kWh/year) | +$439 (19.26%) |
Source: Australian Energy Regulator (AER), Table 2.1: Final Determination DMO Prices – 2023-24 (GST inclusive).
Am I affected by the Default Market Offer?
The DMO only affects customers in New South Wales, South East Queensland and South Australia. Customers in Victoria have a similar default price for electricity, known as the ‘Victorian Default Offer’, while the ACT follows a similar ‘reference price’ structure in its energy market.
If you haven’t changed address or compared electricity plans in a while, chances are you could be on a standing offer. The Australian Energy Regulator (AER) found that approximately 10% of the total energy market in New South Wales, South East Queensland and South Australia were still on standing offers as of 2023.
Customers in the Northern Territory and Western Australia are not affected by default offers, as different rules and regulations apply in these jurisdictions.
Are there other ways to save on electricity?
The DMO offers some relief for electricity customers, however shopping around and comparing market offers remains the best way to reduce electricity bills. The price difference between the cheapest and most expensive electricity deals can be significant, meaning you could be paying too much for power if you haven’t compared retailers in a while.
Image credits: arturnichiporenko/Shutterstock.com
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