Default Electricity Market Offer

Default Market Offer (DMO) Explained

Fact Checked Fact Checked

In this guide, Canstar Blue walks you through what the Default Market Offer (DMO) is, how it works in your state and what it could be costing you on your energy bills.

As any energy-bill payer will tell you, electricity prices have been climbing for some years now. Only recently have changes to the retail market given customers a glimmer of hope for lowering power prices. Following the recommendations of the Australian Competition and Consumer Commission’s (ACCC) 2018 inquiry into electricity prices, the government and regulators stepped in to introduce what’s called a ‘Default Market Offer’. But what is it, how does it work, and more importantly, how can it affect what customers pay for energy?

The Default Market Offer or ‘DMO’ serves as a price cap for electricity on contracts known as ‘standing offers’. 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 we shop around for better deals. With this in mind, we’ve assembled a guide to walk you through how it all works.

What is the ‘Default Market Offer’?

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. At the DMO’s inception, customers previously on standing offers were automatically switched onto their retailer’s cheaper default price. Four years on from its introduction, retailers can still technically charge more than the DMO on their market offers, but many prefer not to. Why? Because the DMO also acts as a ‘reference price’ from which all market offers must be compared to.

The DMO is basically a safety net price for consumers who do not engage in the energy market, ensuring that loyal customers who stick with their retailer are not exploited by expensive standing offers once the terms of their original energy deal comes to an end. 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 in Victoria which is designed to be a competitive deal.

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,” according to the AER. Energy retailers must advertise clear and concise conditions of each plan on their websites, referring to the default price as a point of reference. These rule changes came after the publication of the ACCC’s Retail Electricity Price Inquiry report back in July 2018, which found the electricity retail market 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 slugged with a ‘loyalty tax’ through non-discounted standing offer rates.

How does the Default Market Offer work?

The Default Market Offer acts as a reference point for power prices, which is aimed to protect customers who do not engage in the energy market. Those 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 Australian Energy Regulator and is based on specific usage and supply charges in different areas, meaning the reference price will vary between states and distribution networks.

Plans cheaper than the Default Market Offer

The Default Market Offer was introduced to ensure those who were previously paying the highest prices now pay less, but it is not a competitive deal and you could save much more by switching onto one of the cheapest plans in your area. To help you find a better price, the tables below feature some of the cheapest prices in our database compared to the DMO.

Cheaper than the Default Market Offer in NSW

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.

Cheaper than the Default Market Offer in QLD

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.

Cheaper than the Default Market Offer in SA

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 the energy retailers themselves and often include flashy discounts and incentives for customers. Standing offers, on the other hand, were your bare-basic electricity deals, with no discounts. They were generally more expensive than market offers, and were only intended to be used as the fallback option once a customer’s original energy deal lapsed.

While retailers are supposed to contact customers before their market offer ends – and they end up paying more – many Australian households were left on standing offers and were 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, but the default price is set by the government and is generally lower than previous standing offer prices. This way, 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 will act as a shared benchmark, providing clarity to electricity price comparisons. In particular, retailers must now calculate all conditional discounts on their energy plans in accordance with the reference price. This overcomes 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 12 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 2023-2024, as per the Australian Energy Regulator.

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 Default Market Offer only affects customers in New South Wales, south-east Queensland and South Australia for now, but it will likely be introduced to Tasmania in due course. Customers in Victoria have had a similar default price for power, however this is known as the ‘Victorian Default Offer’, while the ACT also follows a similar ‘reference price’ structure in its energy market.

Not sure if you’re moving to the new default price? If you haven’t changed address for a while and haven’t compared energy plans, chances are you could be on a standing offer. In fact, the Australian Energy Regulator (AER) found that about 10% of the total market in NSW, QLD and SA 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 energy?

The default price offers some relief for many electricity customers. That being said, shopping around and comparing offers remains the best way to reduce your power bill. As we have highlighted, the 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.

While price is a major influence in choosing a particular energy plan, there are other features to look out for. You can browse a range of retailers and compare plans by what matters most to you using our comparison tool below.


Original Author: Jared Mullane

Tara Donnelly
Utilities Editor
Tara Donnelly is an internet and mobile expert - sectors she’s spent a decade covering - and also oversees energy and consumer technology content. She holds a Bachelor of Communications from the University of Canberra and has shared her expertise on national media including 9 News, 7 News, Sunrise and the ABC.

Share this article