Australian households and small businesses could see a reduction in their electricity bills from July 1, 2026, following recent draft determinations from the nation’s energy regulators. The Australian Energy Regulator (AER) and the Essential Services Commission (ESC) in Victoria have both proposed decreases in their respective Default Market Offer (DMO) and Victorian Default Offer (VDO) prices. Concurrently, a new ‘Solar Sharer Offer’ is set to be introduced, allowing many Australians to access free electricity during peak solar generation periods.
AER Proposes DMO Price Reductions Across East Coast
On March 19, 2026, the AER released its draft determination for the Default Market Offer (DMO 8) for the 2026-27 financial year, flagging potential price reductions across New South Wales, South East Queensland, and South Australia. The DMO serves as a safety net for customers on standing offer contracts and acts as a reference price for comparing market offers. The proposed cuts are largely driven by lower wholesale electricity costs, increased output from wind and battery generation, and reduced environmental and retail operating costs.
Under the AER’s draft decision, residential customers could see annual DMO prices fall by between 1.3% and 10.1%, depending on their region. Small businesses are slated for even more significant reductions, with proposed decreases ranging from 7.6% to 21.2%.
“This draft decision points to the potential for some welcome relief for households and small businesses after several years of rising energy costs…” — Clare Savage, AER Chair
Specific proposed annual savings for residential customers on flat tariffs include:
| State/Distribution Zone | Current Annual Price (Approx.) | Proposed Annual Price (Approx.) | Change (AUD) | Change (%) |
|---|---|---|---|---|
| NSW Ausgrid | $1,965 | $1,875 | -$90 | -4.6% |
| NSW Endeavour Energy | $2,411 | $2,347 | -$64 | -2.7% |
| NSW Essential Energy | $2,741 | $2,515 | -$226 | -8.2% |
| South East QLD Energex | $2,143 | $1,927 | -$216 | -10.1% |
| SA Power Networks | $2,301 | $2,270 | -$31 | -1.3% |
Source: AER Draft DMO 2026-27, based on domestic flat tariff for a residential property without a controlled load.
For small businesses, the reductions are more substantial. For instance, a small business in NSW Essential Energy’s zone could see a decrease of up to $1,320, reflecting a 21.2% drop.
Victoria’s Draft Default Offer Also Signals Savings
Following closely, the Essential Services Commission (ESC) in Victoria released its draft decision on the 2026-27 Victorian Default Offer (VDO) on March 12, 2026. The ESC’s proposal suggests an average annual saving of $46 (3%) for domestic customers and $172 (5%) for small business customers on flat tariffs across the state’s five distribution zones. Similar to the DMO, these reductions are primarily attributed to lower environmental costs and stable wholesale electricity costs. The consultation period for the ESC’s draft decision closed on April 10, 2026, with the final decision expected by May 24, 2026.
Solar Sharer Offer: Free Power for Smart Meter Households
A significant new development accompanying the DMO reforms is the introduction of the Solar Sharer Offer (SSO), set to commence on July 1, 2026. This opt-in offer will require energy retailers with over 1,000 customers in DMO-regulated states (New South Wales, South Australia, and South East Queensland) to provide at least three hours of free electricity during the middle of the day. This period, typically between 11 am and 3 pm depending on the state, leverages the abundance of solar generation when wholesale electricity prices are often at their lowest, or even negative.
The SSO is designed to benefit all households with smart meters, whether they have rooftop solar panels or not, including renters. Customers can receive up to 24 kWh of free electricity during this daily window, an amount modelled to meet the average needs of a five-person household. By encouraging the shifting of energy-intensive activities like running dishwashers, washing machines, or charging electric vehicles and home batteries to these free periods, the SSO aims to reduce individual bills and alleviate evening peak demand on the grid. This policy aligns with broader efforts to integrate more renewable energy efficiently into the National Electricity Market.
Households with solar and batteries can particularly benefit from optimising their energy use around such offers. Understanding programs like this can help maximise the value of existing solar installations and home battery storage. Australian Home Battery Rebates Before May 1st 2026: Your State-by-State Eligibility & Value Guide
The Role of Renewables and Market Dynamics
The proposed price reductions highlight the increasing impact of renewable energy sources, particularly wind and battery generation, on Australia’s wholesale electricity market. Increased output from these sources during the fourth quarter of 2025 contributed to lower wholesale prices and reduced spot price volatility. This trend helps mitigate reliance on more expensive gas and hydro generation during peak periods.
However, it is important to note that global energy market dynamics remain fluid. An April 2026 energy market update indicated that a surge in global fuel prices and renewed Middle East tensions in early March pushed electricity futures sharply higher, introducing some uncertainty to the wholesale costs that underpinned the initial draft DMO calculations. While the draft decisions represent the current regulatory outlook, the AER has stated it will consider updated market data before releasing its final determination by May 26, 2026.
For those looking to further reduce their energy costs, shifting energy consumption to off-peak or free periods, as encouraged by the SSO, can be highly effective. This includes optimising the use of appliances like heat pump hot water systems. Are Heat Pump Hot Water Systems Worth It in Australia 2026? A Guide to Costs, Savings & State Rebates Furthermore, participating in Virtual Power Plant (VPP) programs can also help maximise savings for households with batteries by enabling them to contribute to grid stability and earn rewards. Best Virtual Power Plant (VPP) Programs in Australia 2026: Maximise Your Home Battery Savings
What About Federal Energy Bill Relief for 2026?
While state-level default offer prices are set to change, it is crucial for Australians to understand the status of federal energy rebates. The National Energy Bill Relief Fund, which provided up to $150 in energy bill rebates to households and eligible small businesses in the 2025-26 financial year, officially ended on December 31, 2025. This means that, under current policy, no new federal $150 rebate has been confirmed for 2026, and the scheme is fully exhausted.
Consumers are always encouraged to actively compare electricity plans, as market offers can often provide better value than the DMO or VDO. With the final determinations for 2026-27 expected in late May, now is an opportune time for households and businesses to review their energy usage and explore all available options to manage their electricity bills effectively from July 1.