This week has been huge for the energy market, with the final Default Market Offers (DMO) and Victorian Default Offers (VDO) being released back-to-back.
Now that the cat is out of the bag, all eyes are glued to the hotly anticipated plunge in electricity prices (except in SA).
However, not much attention has been paid to the rule changes coinciding with the DMO/VDO.
As we near 1 July, retailers like Origin Energy and Red Energy are reaching out to customers in their inboxes, preparing them for the reforms to come.
It’s extremely important to consider how these tabled reforms could impact ordinary Aussies.
Which rules are changing in the DMO?
The changes below are independent of the DMO. Instead, the Australian Energy Market Commission (AEMC) is responsible for them.
Price increases limited to once every 12 months
The majority of electricity plans follow a variable rate structure, where their rates can be increased at any time (provided customers are given written notice five business days before the change).
Starting 1 July 2026, customers will be shielded from frequent price increases. However, this could have unintended consequences.
For starters, there are no limits on how much retailers can increase their rates, meaning retailers can simply implement one massive price hike to make up for lost time.
While there’s no guarantee this would happen, this is one possibility.
Hardship customers must be moved onto a retailer’s cheapest plan
Hardship customers refer to customers struggling to pay their power bills. Historically, retailers are legally required to offer them access to a hardship program (e.g. repayment instalments, payment extensions).
Starting from 30 Dec 2026, this new reform forces retailers to switch hardship customers to the cheapest possible plan in their catalog. This is a huge win for hardship customers inactive in the energy market.
Hardship customers cannot be charged retail fees (except network charges)
In another win for hardship customers, they cannot be charged the ‘retail costs’ portion of the supply charges on their plan.
In practice, this is an ongoing rate reduction until they are no longer classified as a hardship customer.
Penalty rates for late bill repayments must be fair
Once 1 July 2026 passes, retailers can no longer impose ‘unreasonably’ high penalty fees for late bill payments.
This rule guards customers who don’t use direct debit to pay their bills from being punished with unjustified late fees.
Customers on plans with expired discounts cannot pay more than the standing offer
It’s easy to forget when a temporary discount expires, leaving customers paying out-of-pocket.
This is especially true when they’re moved onto a plan that’s higher than the standing offer.
This new change on 1 July 2026 essentially prevents customers from being punished with a ‘loyalty tax’.
Which rules are changing in the VDO?
The rule changes below are being implemented by the Essential Services Commission (ESC) as part of sweeping reforms to the VIC Energy Retail Code.
Retailers must help customers apply for concessions and rebates
Energy concessions and rebates have conditions that can be difficult for customers to understand. Consequently, Victorians may give up entirely, even if they meet the criteria.
Starting July 1st, retailers must represent their customers' best interests by helping them apply for rebates such as the Utility Bills Relief Grant, simplifying the search for discounts.
Protections for customers on the same plan for over four years
From 1 July 2026 onwards, retailers must ensure customers on plans older than four years are paying a fair price. Customers who haven’t shopped around for electricity plans for more than four years can expect to fork out less to keep the lights on.
Customers to be moved onto their provider’s cheapest plan
Starting October 1st, customers on hardship support or with more than $1,000 of debt over three months will be switched onto their provider’s cheapest plan (which is listed on your latest power bill under the ‘best offer’ section).
Without doing anything, Victorians can enjoy cheaper power bills until their best offer plan expires.
Keep in mind that your provider’s best offer may not be the cheapest plan available in the market — you may run the risk of missing out on even cheaper and more competitive market offers from other providers.
Customers with less than $1,000 in electricity bill debt must remain connected
Previously, retailers were permitted to disconnect customers with more than $300 of power bill debt.
Once October 1st passes, this debt cap will rise to $1,000, protecting more Aussies doing it tough from being disconnected.
Midday Power Saver scheme
The Midday Power Saver scheme is Victoria’s version of the Solar Sharer Offer, promising free electricity between 11 am and 2 pm when the grid is saturated with solar generation.
The scheme is scheduled to be released on 1st October as an optional opt-in.
Do these rules further protect customers?
Yes, these reforms strengthen the VDO and DMO, safeguarding Aussies from predatory practices and the dreaded loyalty tax for sticking to the same provider.
However, the often unspoken downside to all of this is ‘complacency’.
While it is true that the DMO and VDO shields customers from overpaying to keep the lights on, they typically represent the maximum price for electricity.
If you’re on a standing offer, you’re effectively paying hundreds of dollars more than you should yearly.
These reforms, while invaluable, may inadvertently encourage Aussies to be even less proactive in the energy market.
The recent spate of rule changes is meant to empower customers to actively compare energy plans and shop around for the best offer. Ironically, they may instead signal to Aussies to be even more ‘hands-off’.
These changes are meant to reinforce, not replace our ability to decide which electricity plan is best for us — the best electricity plan is the one we choose ourselves.
If you haven’t compared energy plans for a while, you can check your latest power bill to verify if you’re on a standing offer.
You can also use Canstar’s rates table to compare energy plans on our database available at your postcode.
