The Australian Energy Regulator (AER) has today released its final determination for the 2024–25 Default Market Offer (DMO 6). The DMO caps the price retailers can charge household and small business customers on standard retail plans, in South Australia, New South Wales and South East Queensland.
Since releasing the draft determination in March 2024, the AER has considered stakeholder feedback, included updated wholesale, network, environmental scheme and retail costs, and incorporated the latest inflation forecasts.
Electricity affordability remains a top cost-of-living issue for households. Many customers are facing challenges to absorb higher electricity prices in the current economic climate. In recognition of this, the AER has placed increased weight on protecting consumers.
For this decision, and as proposed in the draft determination, we have adjusted the approach we use to calculate the retail allowance, ensuring a reasonable profit margin for retailers but deciding not to apply an additional competition allowance in DMO 6.
The final DMO determination prices vary only slightly from the draft prices. Most residential and small business customers on standard retail plans will experience price reductions, with any increases to be less than, or in line with, the rate of inflation.
From 1 July 2024, most residential customers could have price reductions of between 1% to 6% while some may have increases between 2% and 4% depending on their region and whether they have controlled load (such as underfloor heating or a pool pump running overnight).
Most small business customers could see reductions between 1% and 9% while some could face modest increases of around 1% depending on their region.
AER Chair Ms Clare Savage said that since the 2023-24 DMO 5 was released, there has been movement in wholesale and network costs — the two largest cost components of the DMO.
The wholesale energy costs in DMO 6 have decreased by approximately 21% in South Australia and between 7% and 11% across NSW. In South East Queensland, costs have only decreased slightly (0.2%).
“The easing in wholesale prices has been offset by the pressures currently observed in the poles and wires - network prices,” Ms Savage said.
Key drivers of increases in network prices include adjustments for under-recovery of revenue in prior years, updated capital and operating costs, increases in inflation and interest rates, increases in incentive payments and jurisdictional schemes, and for the NSW networks, the NSW Roadmap contribution allocations.
Costs associated with managing bad and doubtful debts and an expansion in the roll out of smart meters have also resulted in increases in the retail cost component.
“The combined effect of these various changes in costs have resulted in prices decreasing in New South Wales and South Australia, and increasing in South East Queensland,” Ms Savage said.
The Queensland and Australian governments have announced financial assistance with electricity bills that will more than offset any increases. Some households will also be eligible for additional targeted support under schemes provided by the Queensland, NSW and South Australian governments. Consumers can identify which forms of assistance they may be eligible for by going to https://www.energy.gov.au/rebates.
The DMO is an electricity price safety net that protects consumers from unjustifiably high prices. The DMO also acts as a reference price on bills so all customers can compare plans with other retailers.
“We know and understand that cost-of-living pressures are front of mind for many households and small businesses, and we will continue to protect customers from unjustifiably high prices,” Ms Savage said.
“If you’re struggling to pay your bills, contact your retailer as soon as possible because under national energy laws they must assist you. Your retailer is also required to tell you on the front page of your bill, at least every 100 days, if they can offer you a better deal. Most retailers have cheaper deals than the standing offer, so shopping around remains the best way to get the best price,” Ms Savage said.
The AER has a free and independent website Energy Made Easy (www.energymadeeasy.gov.au) where customers can go to easily compare deals.
Residential
| DMO 6 2024-25 | % of customers on DMO | Customer type | DMO for 2024-25 | % change on previous year (nominal) | % change on previous year (real, after removing inflation) |
|---|---|---|---|---|---|
| New South Wales (depending on distribution region) | 8.6% | Residential without CL | $1,810 to $2,499 | -0.9% to -1.1% ($17 to $28 less than last year) | -4.7% to -4.9% ($86 to $124 less than last year) |
| Residential with CL | $2,495 to $2,918 | -2% to -6.4% ($59 to $190 less than last year) | -5.8% to -10.2% ($172 to $303 less than last year) | ||
| South East Queensland | 9.4% | Residential without CL | $2,052 | +4.2% ($83 more than last year) | +0.4% ($8 more than last year) |
| Residential with CL | $2,400 | +1.6% ($37 more than last year) | -2.2% ($53 less than last year) | ||
| South Australia | 7.6% | Residential without CL | $2,216 | -2.8% ($63 less than last year) | -6.6% ($150 less than last year) |
| Residential with CL | $2,746 | -1.5% ($41 less than last year) | -5.3% ($147 less than last year) |
Small Business
| DMO 6 2024-25 | % of customers on DMO | Customer type | DMO for 2024-25 | % change on previous year (nominal) | % change on previous year (real, after removing inflation) |
|---|---|---|---|---|---|
| New South Wales (depending on distribution region) | 18.2% | Small business without CL | $4,407 to $5,718 | -0.7% to -8% ($43 to $402 less than last year) | -4.5% to -11.8% ($262 to $592 less than last year) |
| South East Queensland | 19.7% | Small business without CL | $4,246 | +1% ($44 more than last year) | -2.8% ($116 less than last year) |
| South Australia | 16.7% | Small business without CL | $5,337 | -8.8% ($512 less than last year) | -12.6% ($734 less than last year) |
Note: Real comparisons with DMO 5 are based on RBA 2023–24 inflation forecast of 3.8% in its RBA May 2024 forecast for the 2 years ending June 2025.
CL: controlled load.
Usage is based on 365 days per annum.
