To help consumers who can’t shop around for a new electricity deal, the Australian Government introduced a price safety net in the form of the Default Market Offer (DMO) on 1 July 2019. The DMO sets a price cap on how much energy retailers can charge electricity consumers on default plans, known as standing offer contracts. These are contracts consumers find themselves on when they have not actively shopped around or switched to a new plan.
The DMO applies to residential and small business consumers in New South Wales, South Australia and south-east Queensland. Electricity prices in these regions were not previously regulated.
The independent Australian Energy Regulator (AER) calculates the price cap set by the DMO every year. It represents the average amount of energy used by a consumer in that specific region. It is reset on 1 July each year.
The price cap set by the DMO also acts as a benchmark known as the reference price. Energy retailers must use this when advertising their offers to customers. Consumers can use the reference price to compare different electricity plans when shopping around for a new offer.
The government introduced the DMO following a recommendation by the Australian Competition and Consumer Commission (ACCC). It was one of the reforms identified in the ACCC’s Retail Electricity Pricing Inquiry final report released in July 2018.
Price safety net resources key messages, factsheet, glossary to explain terminology, case studies and frequently asked questions
Victorian Default Offer (VDO) Government of Victoria
Continuing to deliver lower electricity prices The Honourable Minister for Energy and Emissions Reduction, Angus Taylor, media release 1 July 2020
Lower energy bills for Australian households and small businesses The Honourable Minister for Energy and Emissions Reduction, Angus Taylor, media release 30 April 2020
Delivering Affordable and Reliable Power Prime Minister media release 26 March 2019