DMO 2026–27 Changes and Their Impact on Business Energy Bills
Every year on 1 July, the Australian Energy Regulator updates the Default Market Offer. For most businesses, this date passes without much attention. That is a mistake because the DMO does not affect households on standing offers alone. It shapes how Business Electricity Providers price their market offers across the board, and the 2026–27 update carries some of the most significant changes seen in several years.
If you run a business and pay an electricity bill, understanding what is happening and why it matters is worth your time.
What Is the Default Market Offer and How Does It Work?
The Default Market Offer is a price benchmark set annually by the Australian Energy Regulator. It applies to residential and small business customers in New South Wales, South East Queensland, and South Australia.
Two things the DMO does are:
- It acts as a maximum price cap that retailers can charge customers on standing offer contracts.
- It serves as a reference price that shapes how all market offers in those regions are priced.
A standing offer is the default electricity plan a customer ends up on when they have not actively chosen a competitive market offer. Many businesses land on a standing offer without realising it, particularly after moving premises, after a contract expires, or simply because they never engaged with the market in the first place. Fewer than 10% of households and about 15% of small businesses remain on a DMO standing offer. That number is smaller than it used to be, but it still represents a significant portion of businesses paying more than necessary. The DMO is calculated each year based on wholesale electricity costs, network charges, environmental obligations, and retail operating costs. When those inputs change, the DMO changes with them.
What Has Changed for 2026–27 Specifically?
The AER released its draft determination for DMO 2026–27 on 19 March 2026. The headline figure is a meaningful reduction in prices, driven largely by falling wholesale electricity costs and lower environmental and retail operating costs.
The draft decision proposes reductions in DMO prices across all regulated regions. Small business prices would decrease by between 7.6% and 21.2%, depending on the region.
Broken down by state:
- New South Wales: Small business prices are proposed to fall significantly.
- South East Queensland: The largest reductions, with small business savings reaching the upper end of the range.
- South Australia: A reduction of 2% for small business customers.
Under the announced reforms, the DMO would become a fair, trusted, and reasonably priced electricity offer that reflects the essential nature of the service and should only cover the efficient costs of supply. That is a structural shift, not just a pricing adjustment. It means the DMO is being recalibrated to remove costs that were previously being passed through to customers without sufficient justification. The final determination will be released by 26 May 2026, with the new DMO taking effect on 1 July 2026.
One important caveat: the modelling does not yet account for the economic fallout from the ongoing conflict in the Middle East, which is already pushing international coal and gas prices higher. The AER has flagged this explicitly, and the final determination may differ from the draft figures.
Why Does the DMO Matter to Businesses If It Is Designed for Households?
This is the question most business owners do not think to ask. The DMO applies directly to small business customers on standing offers. But its influence goes further than that. Because the DMO acts as a market reference price, competitive market offers from business electricity providers tend to be priced in relation to it. When the DMO falls, competitive offers often follow. When it rises, the same happens in the other direction.
If you only look at the headline price decrease, you could miss the broader structural changes impacting your bill. There are new tariffs, new pricing logic, and a new solar-based electricity offer introduced alongside the headline figures. For businesses, the practical implication is this: the 2026–27 DMO period is a genuine opportunity to review what you are currently paying and whether a market offer reflects the improved pricing conditions in the market.
Which Types of Businesses Are Most Exposed to DMO Changes?
Not every business feels the DMO in the same way.
These situations carry the most risk:
- Businesses on standing offers that have never actively chosen a market offer and are currently sitting at or near the DMO rate.
- Businesses with recently expired contracts that rolled onto a standing offer automatically when their fixed term ended.
- High energy-use operations such as hospitality venues, manufacturers, retailers, and cold storage businesses, where electricity is a significant operating cost.
- Businesses that have recently moved premises and arranged a same-day energy connection without comparing plans at the time.
That last point is common. When a business needs electricity connected quickly for a new location, the priority is getting the connection sorted, not finding the most competitive rate. That is understandable, but it often results in businesses sitting on a standing offer long after the initial connection is made.
How Are Market Offers Different From the DMO Rate?
The DMO is the safety net, not the best deal available. It is the maximum a retailer can charge a standing offer customer. Recent retail data indicates some customers on the DMO could save up to 13% by moving to a mid-market offer in their region.
Market offers from retailers sit below the DMO benchmark when you actively compare. The difference between a standing offer and a well-matched market offer can be meaningful for a business over a 12-month billing cycle, particularly for higher energy users.
Energy Australia Plans and offers from other retailers in the market are priced competitively below the DMO for customers who actively engage. The gap between what a standing offer customer pays and what a market offer customer pays is the clearest argument for comparison.
Key differences between standing offers and market offers:
- Standing offers are set by regulation and carry no commitment period.
- Market offers are set by retailers and often include fixed rates, discounts for on-time payment, or time-of-use pricing.
- Market offers can be fixed-term or ongoing, giving businesses more control over cost predictability.
- Energy Australia plans, and other retailers' offers can be compared through Connect With Us.
What Should Businesses Do Before the New DMO Period Kicks In?
The new DMO takes effect on 1 July 2026. That gives businesses a clear window to act before the market settles into the new pricing period.
Specific steps worth taking now:
- Check your current plan type: Contact your retailer or check your bill to confirm whether you are on a standing offer or a market offer.
- Check your contract end date: If your fixed-term contract is expiring before or around 1 July 2026, you have a specific reason to compare now rather than roll onto a standing offer automatically.
- Compare market offers: Across retailers before the new period begins, using Connect With Us.
- Understand your usage pattern: Before committing to a new plan. Businesses with consistent daytime usage may benefit from different tariff structures than those with evening-heavy consumption.
- If you are arranging a same-day energy connection for a new business premises: Treat the connection and the plan comparison as two separate steps. Getting connected quickly is important, but reviewing your plan within the first billing cycle can recover costs that a standing offer would otherwise accumulate
The AER's own advice is clear: "With prices coming down, it is also important to check that any competitive offer you may be on currently remains the best one for you. Staying on an old offer past 1 July could mean you are paying more than necessary."
What You Should Do Before 1 July 2026
The DMO 2026–27 draft determination is good news for small businesses on standing offers. But the businesses that benefit most from a falling DMO are those that use the change as a prompt to actively compare, not those who simply wait for the new rate to take effect on their existing plan. If your business has not reviewed its electricity plan in the past 12 months, the period before 1 July 2026 is a practical window to do that. The pricing conditions in the market are more favourable than they have been in several years, and the final determination, expected by 26 May 2026, will confirm the exact figures that take effect from July.
