Energy prices are shifting for businesses
Energy prices are moving again.
The Australian Energy Regulator’s Default market offer draft determination for 2026–27 signals lower prices across most regions. But it is not just about price drops.
There are underlying structural changes. New tariffs. New pricing logic. A new solar-based electricity offer.
If you only look at the headline price decrease, you could miss any broader changes impacting your bill.
What the DMO is and why it matters
The Default Market Offer (DMO) is an electricity price benchmark issued by the Australian Energy Regulator. Also known as the electricity price safety net, it protects households and small businesses on standard retail plans from unfairly high prices in South Australia, New South Wales and South East Queensland. It sets a benchmark price for electricity and applies to standing offers, which are the default plans businesses can fall onto.
It also acts as a reference point. Retailers use it to show whether their market offers are cheaper or more expensive.
For example, if the DMO benchmark for your business is $4,500 per year and a market offer comes in at $4,050, that offer is 10% lower than the DMO. That gives you a clear way to gauge how competitive it is. In practice, most retailers' discounts are applied across the total bill, but how they are structured can vary. The percentage difference is a guide based on the reference bill, not a guarantee of the same reduction on your final total.
You can apply the same logic across multiple retailer plans. If one retailer is 8% below the DMO and another is 12% below, the second plan is more competitive on price. This is a simple way to compare plans on a like-for-like basis.
Just keep in mind, price is only part of the equation. Tariff structure, contract terms and how your business uses energy still determine your final bill cost.
For businesses, it influences the baseline price you pay if you are not actively reviewing your plan. If the DMO changes, the benchmark shifts, and market pricing may move with it over time.
How the DMO is calculated
The DMO is built from several cost components that together form a representative annual bill. It is not a single price set in isolation. It is a maximum price levell of what it should cost an efficient retailer to supply electricity.
At its core, the DMO is designed to reflect the maximum cost of supplying energy to a typical customer in each region. The regulator looks at future wholesale prices, network charges, environmental obligations and retail operating costs, then brings them together into a single benchmark. This creates a consistent reference point across the market, even though the underlying costs can vary significantly by location and tariff type.
It also means the DMO is not static. Each year, these inputs shift based on market conditions, infrastructure costs and policy settings. As a result, the DMO moves with the market, not against it, which is why businesses can see meaningful changes year on year even if their usage stays the same.
DMO draft 2026–27 price changes
Residential draft price changes by region
Source: Australian Energy Regulator, Default Market Offer 2026–27 Draft Determination (19 March 2026). Figures represent representative annual bills for residential customers. Annual usage assumptions vary by distribution region, including 3,900 kWh (Ausgrid), 4,900 kWh (Endeavour Energy), 4,600 kWh (Essential Energy), 4,600 kWh (Energex), and 4,000 kWh (SA Power Networks). Figures based on Flat Rate tariffs only, which charge a single price per kWh, regardless of when energy is used, as opposed to Time-of-Use tariffs, which charge different prices depending on the time of day, reflecting variations in demand and supply on the electricity network.
What this means for residential customers
Lower prices are the headline, but the impact depends on how energy is used.
Most households will see a modest reduction in annual electricity costs. The largest decreases are in regional areas, particularly in Essential Energy and Energex distribution zones.
But pricing is becoming more dynamic.
Time-of-use tariffs and offers like the Solar Sharer, a new regulated electricity offer under the DMO framework, are designed to reward households that can shift energy use into the middle of the day. Running appliances, charging devices, or using heating and cooling during these periods can reduce costs further.
For households that cannot shift usage, the benefit may be smaller. In some cases, higher rates outside solar hours could offset the savings.
The key is simple. Understanding when you use energy now matters as much as how much you use.
Small business draft price changes by region
Source: Australian Energy Regulator, Default Market Offer 2026–27 Draft Determination (19 March 2026). Figures represent representative annual bills for small business customers based on assumed average usage of 10,000 kWh per year. Figures based on Flat Rate tariffs only, which charge a single price per kWh, regardless of when energy is used, as opposed to Time-of-Use tariffs, which charge different prices depending on the time of day, reflecting variations in demand and supply on the electricity network.
What this means for small businesses
Price reductions create an immediate opportunity to lower operating costs.
Across all regions, small businesses are seeing meaningful decreases, with regions experiencing drops between 8% and 21%. For many, this is the first meaningful easing of energy costs since the sharp increases seen in recent years.
But structure is doing more of the heavy lifting.
Tariffs, usage patterns and operating hours now have a direct impact on what you pay. Businesses that run equipment during peak periods may still face higher costs, even with lower headline rates.
The risk for your business is assuming the lower DMO automatically means lower bills. If your tariff or contract does not match how your business operates, savings can be missed.
What is actually driving lower prices
The drop in DMO prices is not coming from one single factor. It is the result of multiple cost components moving at the same time.
The key takeaway is simple.
Energy prices are falling overall, but not every part of your bill is going down.
Network costs are rising. They are one of the largest components of your bill. According to the ACCC Inquiry into the National Electricity Market: December 2024, network charges account for around 37% of small business electricity bills and 39% for residential bills.
A shift toward cost-reflective pricing
This year’s DMO introduces a more direct approach to pricing.
The regulator is now focused on what it calls efficient costs. That means pricing is designed to reflect the actual cost of supplying electricity, rather than building in extra buffers.
What does that mean for your business?
- Less margin for retailers pricing inefficiencies
- More emphasis on how your business actually uses energy
- Greater impact from tariff structure
In short, structure matters more than ever.
The rise of time-of-use and demand-based pricing
Flat rates are no longer the default in practice.
Time-of-use and more flexible tariffs are becoming more common, especially as smart meters roll out.
This means:
- Energy used during peak periods costs more
- Energy used during low-demand periods costs less
- Your operating hours directly impact your bill
Two businesses using the same total energy can pay very different amounts depending on when they use it.
The new Solar Sharer Offer
One of the biggest changes in this draft is the introduction of the Solar Sharer Offer.
How it works
The idea is simple. Use energy when solar supply is high and demand is low.
But there is a trade-off.
Outside the free period, energy rates can be higher. So, the benefit depends on whether your household can shift usage into that window.
For households, this may reduce costs depending on how energy is used. For small businesses, similar types of offers may exist depending on your retailer and meter, but this specific DMO structure is not being rolled out in the same way.
This is not a default tariff. It is a new type of defualt offer designed to encourage businesses to use energy when solar supply is highest. It supports lower midday demand across the grid while helping reduce costs for customers who can shift usage.
This is a regulated structure under the DMO, not something set or varied by individual retailers. The principle is consistent. It rewards using electricity during solar-heavy periods and supports a more stable energy system overall. It only makes sense if your usage aligns with the daytime window.
Key takeaway
Prices are coming down. That creates an opportunity to reset your energy plan.
But structure is doing more of the heavy lifting. Even as prices come down, the way your plan is set up, including your tariff, usage patterns and contract terms, has a bigger influence on what you actually pay than the headline rate itself.
Tariff type, timing of use and contract settings now directly impact what you pay. Two businesses on the same rate can still see very different outcomes.
New pricing models like the Solar Sharer Offer reward flexibility. Eligible residential customers who can adapt their usage will benefit the most.
Doing nothing is the risk.
If your contract rolls over, or your tariff changes or no longer reflects how your business actually uses energy, you could still end up overpaying despite lower market prices.
Energy is not a fixed cost. It is a managed cost.
Businesses that stay on top of their energy strategy stay in control of their costs.
How Zembl helps
Most businesses do not have time to break down tariffs, pricing structures and market changes.
That is where Zembl comes in.
In one quick call, a Zembl Energy Expert reviews your current bill, checks your tariff structure and compares it with competitive options from a trusted panel of retailers.
Clear answers. No jargon. Practical savings.
Everything energy. Sorted.
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