Pain at the pump, pressure on costs, but relief on electricity bills

Why electricity prices are moving differently

For many businesses, costs are still rising.

Wages, rent, fuel and finance are all putting pressure on margins. So, the idea that electricity prices could fall at the same time feels out of step.

But that is exactly what the latest draft Default Market Offer and Victorian Default Offer suggest. The Default Market Offer (DMO) sets a reference price cap for electricity in New South Wales, South East Queensland and South Australia. The Victorian Default Offer (VDO) does the same for Victoria. Both are set by regulators to protect households and small businesses from being overcharged. If you want a deeper breakdown of how these benchmarks work, you can read more about the DMO here and the VDO here.

From 1 July, benchmark electricity prices are expected to decrease across most regions, even while broader inflation remains elevated.

What the latest pricing shows

The Australian Energy Regulator (AER), the government body that oversees electricity pricing, has released its draft Default Market Offer for 2026–27, pointing to clear reductions for small businesses.

Across New South Wales, South East Queensland and South Australia, prices are expected to fall between 8.5% and 21.2%, depending on the region.

In Victoria, the draft Victorian Default Offer shows a smaller but still meaningful reduction, with average small business bills expected to fall by around $172 per year, or 5%.

This is one of the first clear signs of electricity price relief in the last two years.

Why electricity prices may ease

Electricity prices are not moving in line with the rest of the economy because they are driven by different inputs.

The latest draft determinations point to three main drivers of the reduction:

• Lower wholesale electricity costs, meaning the price energy retailers pay to buy electricity before selling it to you

• Reduced environmental costs, which are levies that fund renewable energy programs and emissions schemes

• Lower retail operating costs, covering the day-to-day expenses of running an energy retailer, like administration and billing

These are some of the largest components that make up electricity pricing.

When they fall, regulated benchmark prices fall with them.

This does not mean electricity has become cheap. It means some of the pressure behind pricing has eased enough to flow through to customers.

What the numbers actually mean

The headline reductions are real, but they do not automatically translate into lower bills for every business.

Location matters. Your tariff (the pricing structure your business is on) matters. Usage patterns matter.

Two businesses in the same region can still pay very different amounts depending on how and when they use electricity.

This is the key shift. Pricing is becoming more reflective of behaviour, not just total usage.

Why inflation is still the bigger issue

Even with lower electricity prices, most businesses are still operating in a high-cost environment.

Inflation remains elevated, with essential costs like housing, food and services continuing to rise. Interest rates are also adding pressure, increasing the cost of borrowing and reducing cash flow flexibility.

So, while electricity prices may be easing, it is only one part of the cost base.

The fuel factor

Energy costs are not limited to electricity.

Australia imports a significant portion of its fuel, which means local petrol and diesel prices are heavily influenced by what happens in global oil markets. When global oil prices rise, costs flow through to Australian businesses.

For many businesses, this flows directly into:

• Transport and logistics

• Delivery costs

• Supply chain pricing

This is why the current outlook is mixed.

Electricity prices may be easing, but broader energy-related costs are still volatile. Ongoing geopolitical tensions, including conflict in the Middle East, are contributing to uncertainty in global fuel markets. You can read more about how this may impact Australian energy prices here.

What this means for your business

Lower benchmark prices create an opportunity, not a guarantee.

If you have not reviewed your electricity bill you may still be paying more than you need to.  

This is the moment to review your setup.

Check your contract. Check your tariff. Compare what is available.

Because even in a falling market, the structure of your plan will determine what you actually pay.

The takeaway

Electricity prices are starting to move down, even while the rest of the economy remains expensive.

That disconnect comes down to how electricity pricing is built. When wholesale costs, environmental charges and retail costs ease, electricity prices can fall independently of broader inflation.

For small businesses, this is welcome relief.

But it is not a full reset.

Electricity is just one part of your cost base. Staying in control means reviewing it properly and making sure your plan still reflects how your business operates.

How Zembl helps

Zembl helps businesses make sense of changing energy prices.

In one quick call, a Zembl Energy Expert reviews your current bill, checks your tariff and compares it with competitive options from a trusted panel of retailers.

If there is a better option, we handle the switch for you.

Clear advice. No jargon. Practical savings.

Everything energy. Sorted.