A combination of regulatory decisions and market changes will lead to varied electricity price outcomes for Australian households and businesses from July 1, 2026.
The Australian Energy Regulator (AER) and the Essential Services Commission (ESC) have released their final determinations for default market offers (DMOs) and the Victorian Default Offer (VDO), respectively. Concurrently, a new opt-in "Solar Sharer Offer" (SSO) providing three hours of free daytime electricity will become available in several states. Energy ministers have also approved new consumer protection rules.
Regulated Price Changes
Default Market Offer (NSW, South-East Queensland, South Australia)
The AER announced its final DMO for the 2026-27 financial year, setting the maximum price electricity retailers can charge customers on standing offers.
Residential Customers:
- New South Wales: Prices will decrease by 3.4% to 5%, resulting in annual savings of between $66 and $137.
- South-East Queensland: Prices will decrease by 7.2% to 10.7%, resulting in average annual savings of approximately $155.
- South Australia: Prices will see a mixed outcome. Most households will experience a decrease of 1.1%, while some customers on flat-rate plans will face an increase of 1.4%, equating to an average annual increase of $33.
Small Business Customers:
- New South Wales: Prices to decrease by 9% to 11.3%, saving between $432 and $705 annually.
- South-East Queensland: Prices to decrease by 10.4%, saving approximately $445 annually.
- South Australia: Prices to decrease by 6.8%, saving approximately $379 annually.
Victorian Default Offer
The Essential Services Commission (ESC) announced a reduction in the VDO for the upcoming financial year.
- Residential customers: Default offers will decrease by an average of 5%, resulting in average annual savings of $84. Savings vary by distributor, ranging from $65 to $160.
- Small business customers: Default offers will decrease by an average of 6%, resulting in average annual savings of $241.
- Approximately 512,000 households and 62,000 small businesses are currently on the VDO, including 182,000 customers in apartments and caravan parks.
Drivers of Price Changes
Regulators and government ministers attributed the price reductions to lower wholesale electricity costs. Factors cited include:
- Increased output from renewable energy sources (wind, solar).
- The growing contribution of utility-scale battery storage, which has helped reduce price volatility during peak demand periods.
- Lower forward contract prices between generators and retailers.
- Reforms to the DMO calculation that removed certain retailer costs.
AER Chair Clare Savage stated that the outcome reflects easing cost pressures in the electricity supply chain. She also noted that while the Middle East conflict is being monitored, it is not currently having a significant impact on Australian power prices, although the market remains exposed to international fossil fuel price fluctuations.
New Tariff: Solar Sharer Offer (SSO)
A new opt-in tariff, the "Solar Sharer Offer," will be available from July 1, 2026, to customers in New South Wales, South Australia, and South-East Queensland. The initiative is designed to leverage surplus daytime solar generation.
Details of the Offer:
- Retailers must offer at least one residential plan providing three hours of free electricity daily.
- The free power is capped at 24 kilowatt-hours (kWh) per day, equivalent to the average daily use of a four-person household.
- Eligibility requires a smart meter. The offer is available to homeowners and renters, regardless of whether they have solar panels or batteries.
- The free power windows are aligned with peak solar generation:
- 11:00 AM to 2:00 PM for New South Wales and South-East Queensland.
- 12:00 PM to 3:00 PM for South Australia.
The AER states that the overall cost of the SSO plan will be comparable to the standard DMO, with free electricity during the window offset by slightly higher usage or supply charges at other times.
Government analysis projects potential annual savings of between $150 for a single occupant and up to $1,100 for a five-person household that shifts significant energy use (e.g., dishwashers, washing machines, EV charging) to the free window.
Industry Response:
Major energy retailers, including AGL and EnergyAustralia, have requested the government delay the program's implementation until at least mid-2027. They cited concerns that the scheme could disproportionately benefit wealthier customers with home batteries and electric vehicles, potentially leading to higher costs for other users, including renters and lower-income households. Energy Minister Chris Bowen stated the government does not intend to delay the start date and is consulting with the industry on implementation.
New Consumer Protection Regulations
State and federal energy ministers have approved new rules effective from July 1, 2026. These regulations will apply in New South Wales, Queensland, and South Australia and will:
- Prohibit retailers from increasing prices on market offer contracts more than once every 12 months.
- Prevent customers from being automatically moved to a plan with a price higher than the default offer when their current plan's benefits expire (banning "loyalty penalties").
- Restrict retailers from charging excessive late-payment fees.
- Exempt vulnerable customers from certain retail fees.
Future Energy Initiatives
The federal government is consulting on a potential 20% east coast gas reservation scheme, intended to reduce household gas bills. Resources Minister Madeleine King expressed disappointment with the industry's response to the consultation process.
From July 2026, new federal regulations will require power companies to offer three hours of free power daily to all Australian households through the Solar Sharer program. This initiative will be accessible to homes and apartments, regardless of whether they have solar panels, provided they have a smart meter and opt into the new plans.