DMO and VDO 2026-27: What Is Changing for Your Electricity Bill on 1 July
Updated 25 March 2026 · Based on AER draft determination (19 March 2026) · 12 min read
Key Takeaways
The AER's draft DMO 2026-27 proposes price reductions of 1.3% to 10.1% for residential customers in NSW, South East Queensland and South Australia. Victoria's draft VDO proposes an average 3% reduction. South East Queensland (Energex) sees the largest drop at 10.1%, while South Australia sees the smallest at 1.3%. These are draft figures. Final determinations are expected in May 2026, with new prices taking effect 1 July 2026.
What Are the DMO and VDO?
The Default Market Offer (DMO) is the maximum price electricity retailers can charge customers on standing offer plans in New South Wales, South East Queensland and South Australia. Set annually by the Australian Energy Regulator (AER), the DMO also serves as a reference price that retailers must display when advertising their market offers, making it easier to compare plans.
The Victorian Default Offer (VDO) serves a similar function in Victoria, but is set by the Essential Services Commission (ESC). The VDO is designed to be a fair price that reflects efficient retailer costs, without including allowances for retailer competition. It also applies as the maximum charge for customers in embedded networks such as apartment buildings and retirement homes.
The DMO and VDO are not the cheapest plans available. They are safety net prices for customers who have not actively chosen a competitive market offer. Most retailers offer market plans priced below the DMO or VDO. If you are on a standing offer, you are almost certainly paying more than necessary.
Draft DMO 2026-27: Proposed Price Changes
On 19 March 2026, the AER released its draft determination for the DMO 2026-27 (also referred to as DMO 8). The draft proposes reductions across all regulated regions, driven primarily by lower wholesale electricity costs, reduced environmental scheme costs and lower retail operating costs.
For residential customers, the proposed reductions range from 1.3% in South Australia to 10.1% in South East Queensland. For small businesses, reductions range from 7.6% to 21.2%. These are the most significant proposed price reductions since the energy crisis following Russia's invasion of Ukraine in 2022.
| Network | State | Residential change | Estimated annual saving |
|---|---|---|---|
| Ausgrid | NSW | -0.9% | ~$17 |
| Endeavour Energy | NSW | -0.2% | ~$5 |
| Essential Energy | NSW | -0.6% | ~$14 |
| Energex | SE QLD | -10.1% | ~$216 |
| SA Power Networks | SA | -1.3% | ~$31 |
| VIC (5 zones avg) | VIC | ~-3% | ~$46 |
Source: AER draft DMO 2026-27 determination, ESC VDO 2026-27 draft decision. Residential customers on flat rate tariffs without controlled load.
Your State: Price Change Summary
Select your state to see the proposed changes relevant to you.
New South Wales
Regulated by: AER (Default Market Offer)
Ausgrid
Sydney, Newcastle, Central Coast
-0.9%
Est. annual: $1,810 (saving ~$17/yr)
Endeavour Energy
Western Sydney, Wollongong, Blue Mountains
-0.2%
Est. annual: $2,223 (saving ~$5/yr)
Essential Energy
Regional NSW
-0.6%
Est. annual: $2,513 (saving ~$14/yr)
Figures are for residential customers on flat rate tariffs without controlled load. Ausgrid and Endeavour networks also have separate time-of-use pricing. The new Solar Sharer Offer (SSO) will be available from 1 July 2026.
What Is Driving the Price Changes?
The proposed reductions are driven by several factors. Wholesale electricity costs have fallen as renewable energy generation, particularly from wind and battery storage, has increased and reduced spot price volatility. Environmental scheme costs have also decreased, with federal renewable energy target costs declining as the scheme matures. Retail operating costs reported by retailers have also fallen.
The 2026-27 DMO also reflects government reforms announced in November 2025. The DMO is now calculated using only efficient costs and the lowest available network tariffs, rather than including additional headroom for retailer competition. This structural change contributes to lower prices.
The AER has noted that its wholesale cost modelling was completed before the escalation of the current conflict in the Middle East, which has since pushed forward contract prices higher. The final determination in May will incorporate updated data and may differ from the draft.
New Reforms in DMO 2026-27
The DMO 2026-27 introduces several structural reforms beyond headline price changes.
For the first time, the DMO includes both a flat rate annual price and a time-of-use annual price. Previously, the DMO only set a flat rate reference price. This change makes it easier to compare plans across different tariff types.
The DMO now also includes capped rates for both usage charges and daily supply charges on standing offers. Retailers cannot charge usage rates above the cap during any time period. This prevents retailers from setting very high peak rates while advertising a low overall annual price.
Additional consumer protections include: retailers cannot roll customers onto a plan above the DMO price when current plan benefits expire, retailers cannot charge unreasonable late payment fees, and vulnerable customers are exempt from retail fees such as credit card charges.
The Solar Sharer Offer (SSO) is also introduced as a new regulated tariff type. See our SSO guide for full details.
Comparing Plans Before and After 1 July
The DMO and VDO are reference prices. They represent the maximum a retailer can charge on a standing offer. Most competitive market offers are priced 18% to 27% below the DMO according to AER data from the current year. If you are on a standing offer, comparing plans now is likely to identify savings regardless of what happens on 1 July.
If you are already on a competitive market offer, the decision is less straightforward. Some retailers may adjust their market offer pricing in response to the new DMO, while others may not. Locking in a competitive rate now does not prevent you from switching again after 1 July if a better offer appears.
Use energy·saver to compare electricity plans at your address. You can also check plans for your state: NSW, QLD, SA, VIC, or TAS.
DMO/VDO 2026-27 Timeline
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Compare PlansGeneral information only. Prices are estimates based on the AER draft DMO 2026-27 determination (19 March 2026) and ESC draft VDO 2026-27 decision. Final rates will be published in May 2026. Actual bill amounts depend on your usage, tariff type, and retailer. Always check your bill for actual charges. energy·saver does not provide financial advice.