Price safety net

The Default Market Offer (DMO) helps consumers who don’t or can’t shop around for a new electricity deal. 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 NSW, South Australia and south-east Queensland.

The independent Australian Energy Regulator (AER) determines the price cap set by the DMO, which comes into effect on 1 July each year. The price cap is based on the average amount of energy used by a consumer in that specific region.

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. Customers can use the reference price to compare different electricity plans when shopping around for a new offer.

The DMO was introduced 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.

The DMO has been operating since 2019 through the introduction of the Competition and Consumer (Industry Code—Electricity Retail) Regulations 2019 (the Code) and was reviewed in 2021. The review sought to:

• determine consumer outcomes due to the introduction of the DMO and reference price
• assess the Code’s impact on electricity prices
• analyse the effectiveness of its implementation.

The outcomes (PDF 709 KB) from the review were finalised by the former Minister in March 2022. These were:

• amend the regulations to change the date for the DMO determination from 1 May to the first business day after 25 May to provide more time for the AER to include the most recent network costs in the final price determination. This change will ensure greater accuracy in price determinations
• consult further on:
  • amending the name of the reference price, if there is an alternative which will improve consumer understanding
  • how the reference price operates across the range of more complex offers provided by retailers
  • how best to extend price cap protection provided by the DMO to customers in embedded networks
• undertake another review of the Code 2 years after the implementation of the Consumer Data Right for Energy for initial retailers, in 2024.

The regulations setting the DMO determination date were amended and in effect for the 2022-23 DMO.

For the other outcomes, the department will work with the ACCC and the AER to undertake consultation in 2022.

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Price safety net resources key messages, factsheet, glossary to explain terminology, case studies and frequently asked questions

Victorian Default Offer (VDO) Victorian Government