Households in NSW, Queensland and South Australia could see some power bill relief next financial year as wholesale and operating costs come down.
The Australian Energy Regulator (AER) has released its draft Default Market Offer (DMO) for 2026–27, pointing to potential electricity price reductions across regulated regions, driven primarily by lower wholesale and operating costs.
Under the draft determination, residential electricity prices could fall by between 1.3 and 10.1 per cent, while small business prices may decrease by 7.6 to 21.2 per cent, depending on jurisdiction. The DMO applies in New South Wales, south east Queensland and South Australia and functions as both a safety-net tariff and a reference price for market offers.
“This draft decision points to the potential for some welcome relief for households and small businesses after several years of rising energy costs following Russia’s invasion of Ukraine,” AER Chair Clare Savage said.
Savage attributed the changes to declining wholesale electricity contract prices, reduced spot market volatility, and increased output from wind and battery generation. Lower retail operating costs and reduced environmental scheme costs have also contributed.
“Recent government reforms mean we are now calculating the DMO using only efficient costs, including using the lowest network tariffs available to retailers,” she said.
The draft also introduces a Solar Sharer Offer, an opt-in tariff structure with free midday electricity periods aimed at aligning demand with solar generation. While cost-neutral relative to time-of-use tariffs for typical users, it creates incentives for load shifting, particularly for flexible demand such as electric vehicle charging.
Despite the downward trend, the AER flagged ongoing exposure to global energy markets. Savage noted that recent geopolitical developments have already influenced forward wholesale contract prices.
“We will continue to monitor this closely before making our final determination,” Savage said.
The draft determination is open for consultation, with a final decision due by May 26, 2026 and implementation from July 1.
