Australian energy consumers are set to receive their biggest electricity bill relief in years, with regulators proposing significant price cuts across multiple states and introducing groundbreaking free power initiatives.
Major bill reductions across multiple states
Household electricity bills could fall by up to 10.1% if the draft default prices published by the Australian Energy Regulator are realised, with small business prices decreasing by between 7.6% and 21.2% depending on the region. Customers in Queensland on the Energex network are set for the biggest drop in electricity prices, with the regulator slating a decrease to the default electricity price of 10.1%, equating to $216 less per year for a typical household on a flat rate plan.
The draft decision proposes reductions in Default Market Offer (DMO) prices across all regulated regions - New South Wales, South East Queensland and South Australia - driven largely by lower wholesale electricity costs and reduced environmental and retail operating costs.
Victoria is also seeing relief, with the Essential Services Commission’s draft decision on the 2026-27 Victorian Default Offer proposing reductions in each of the state’s five electricity distribution zones, with domestic customers saving $46 a year (three per cent) on average and small business customers saving $172 (five per cent).
“The reductions reflect easing costs across parts of the electricity supply chain, particularly wholesale energy where we’ve seen falling electricity contract prices, reduced spot price volatility, and increased output from wind and battery generation,” with retailers also reporting lower retail operating costs.
Solar Sharer Offer: Free daytime electricity
The most significant development is the introduction of the Solar Sharer Offer, representing a revolutionary approach to electricity pricing. The draft determination introduces the Solar Sharer Offer, a new opt-in electricity plan that includes three hours of free usage during the middle of the day to help households take advantage of abundant solar energy, with free usage periods set to be 11am to 2pm in New South Wales and South East Queensland, and 12pm to 3pm in South Australia.
The Solar Sharer Offer will require retailers to offer free electricity to households with smart meters for at least 3 hours in the middle of the day when solar generation is at its peak, with customers able to access up to 24 kWh of free electricity during the daily window, available to homes even if they don’t have solar panels.
Households will have access to a new offer with three hours of free electricity during the day, when Australia has abundant low-cost solar power flowing through the grid, with families who run appliances like dishwashers, washing machines, pool pumps or hot water systems during the free power period able to save money on their bills.
Renewables driving cost reductions
It is no coincidence that energy price reductions are coming as Australia surpasses the milestone of 51 per cent renewable electricity in the National Electricity Market for the first time, a direct result of more of the cheapest form of new energy entering the grid.
Victoria’s record investment in renewables helped achieve the lowest wholesale power prices in the country, with Victoria’s average wholesale price at $78 per megawatt-hour, compared to $103 for New South Wales, $96 for Tasmania, $87 for South Australia and $85 for Queensland.
The cost of electricity looks set to fall for households and businesses in all of Australia’s National Electricity Market states, as wholesale power prices are eased down by reduced volatility and bigger contributions from wind farms and big batteries.
Global risks remain
Despite the positive outlook, regulators remain cautious about global energy market volatility. “The wholesale cost of electricity, included in this draft decision, was calculated prior to the commencement of the current conflict in the Middle East. Since the conflict began, we have seen increases in the price of forward wholesale electricity contracts for 2026-27. However, even at these recent elevated levels, these forward contracts are still currently lower than last year”.
Timeline for implementation
The AER will consider stakeholder feedback and updated market data before releasing its final decision by 26 May 2026, with the new DMO taking effect on 1 July 2026. The reforms also pave the way for the new Solar Sharer Offer, which will be an option from 1 July 2026 for households in South East Queensland, New South Wales and South Australia.
The proposed changes represent the most significant shift in Australian electricity pricing in recent years, combining substantial bill reductions with innovative approaches to managing the growing influence of renewable energy in the grid. The regulator’s Default Market Offer is a safeguard for those who can’t or don’t shop around for their electricity, with 7.8% of households on these plans, ensuring vulnerable consumers benefit from these historic reductions.