Good news on energy prices

Household electricity prices in some states could fall by up to 10% next financial year under the energy regulator’s draft determination for 2026–27.

The draft decision proposes reductions in Default Market Offer (DMO) prices across all regulated regions – New South Wales, South East Queensland, and South Australia – due to lower wholesale electricity costs and reduced environmental and retail operating costs. 

If adopted in the final determination, DMO annual prices for residential customers would fall by between 1.3% and 10.1%, while small business prices would decrease by between 7.6% and 21.2%, depending on the region. 

With the war on Iran pushing up energy prices, this is good news for consumers feeling pain at the petrol pump, but it could be false dawn if the war drags on? More on that later. 

According to the Australian Energy Regulator (AER), the DMO sets an efficiently priced safety-net for households and small businesses on standing offer electricity plans and is supposed to act as a reference price to help consumers compare market offers. 

It is important to note that the final DMO is not yet finalised and, even when it is, it will not necessarily be the lowest price you can pay for power. National Seniors Australia (NSA) recommends that, if possible, you shop around for the best price for your household. Easier said than done, as we point out below!

AER chair, Clare Savage, said the proposed price reductions reflect easing electricity costs and a shift to an efficient price framework under new government regulations, but said the AER continues to closely monitor global energy market developments.  

“The reductions reflect easing costs across parts of the electricity supply chain, particularly wholesale energy where we’ve seen falling electricity contract prices, reduced spot price volatility, and increased output from wind and battery generation,” Ms Savage said. 

“Retailers have also reported lower retail operating costs, while reductions in the cost of environmental schemes have also had a positive impact on reducing prices.” 

Ms Savage said the regulator had “worked to ensure consumers have access to a trusted, fair, and reasonably priced Default Market Offer that, come 1 July, is locked in for the next 12 months, providing consumers who can’t or won’t shop around that important safety net”. 

Under the AER’s draft decision:

• New South Wales: residential prices would decrease by 2.4% (-$58) to 8.2% (-$226), while small business prices would fall by 7.6% (-$379) to 21.2% (-$1,320) depending on the distribution zone. 

• South East Queensland: residential prices would decrease by 10.1% (-$216), and small business prices by 12.8% (-$550). 

• South Australia: residential prices would decrease by 1.3% (-$31), while small business prices would fall by 15.2% (-$845). 

The AER’s draft determination is now open for consultation for three weeks and the final prices may differ before a final decision is released on 26 May 2026, to take effect on 1 July. 

The draft determination also introduces the Solar Sharer Offer, a new opt-in electricity plan that includes three hours of free usage during the middle of the day to help households take advantage of solar energy and lower total electricity system costs. 

The free usage periods are set to be 11am to 2pm in New South Wales and South East Queensland, and 12pm to 3pm in South Australia. 

The Solar Sharer Offer has the same annual cost as the DMO Time of Use tariff but with free energy in the middle of the day and slightly higher prices (1 to 4 cents/kWh) in other parts of the day. 

The AER said customers who use electricity at roughly the same times of the day as the average customer, will be no worse off on the Solar Sharer Offer than the DMO Time of Use tariff. 

However, if those customers can shift some electricity use into the middle of the day, such as running appliances or charging electric vehicles, they will be able to reduce their bills. 

Ms Savage said the AER remains cautious about global events, particularly in the Middle East, and how they can influence energy markets in the lead up to the final decision. 

She said there had been increases in the price of forward wholesale electricity contracts for 2026-27 since the conflict began but they are currently lower than last year. 

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