Rate relief: regulator to shift electricity prices in reverse

Household electricity bills could soon drop by up to 10.1% if the draft default prices published today by the Australian Energy Regulator are realised, saving a typical household up to $226 a year in some areas.

The proposed drop in prices, which are set by the regulator for New South Wales, south east Queensland, and South Australia, is due to the reduction in the cost of producing electricity, lower environmental costs, and falling retail costs.

The regulator’s Default Market Offer (DMO) is a safeguard for those who can’t or don’t shop around for their electricity, with 7.8% of households on these plans (see state breakdown at end). The prices also act as a benchmark for retail market plans, which are typically more competitively priced.

In welcome news for small businesses, the proposed drop in benchmark prices is even more significant with reductions of up to 21.2%, resulting in a potential saving of $1,320 for a standard small business (breakdown at end).

Customers in Queensland on the Energex network, are set for the biggest drop in electricity prices, with the regulator slating a decrease to the default electricity price of 10.1%. For a typical household on a flat rate plan, this would equate to $216 less a year on their bills.

Source: AER. Based on domestic flat tariff for the 2026-27 financial year for a residential property without a controlled load. The AER’s average household electricity use is determined by the regulator and varies across networks.

Today’s decision follows similar, albeit smaller, moves from the Victorian Energy Regulator last week, which also proposed drops of up to 3%. 

Next steps

Regulators will now enter a period of consultation for three weeks, before the Australian Energy Regulator (AER) publishes final prices on Tuesday 26 May. The new prices will then take effect on 1 July.

One key complicating factor is the war in the Middle East, which has not been factored into this draft decision. This is likely to put upward pressure on wholesale electricity costs, however, the regulator has said the increases have been relatively small so far. 

Depending on how the conflict progresses over coming weeks, this could push today’s draft prices higher when the final determination is released at the end of May.

Rule changes

The 1st of July will also mark the start of a series of new electricity rules to help households compare and switch electricity plans. These rules for electricity retailers include:

• Limiting price hikes to no more than once a year.
• Ensuring customers who sign up to a plan with a temporary benefit do not roll over to one that is higher than the default price.
• Banning unreasonably high penalties for not paying bills on time.
• Restricting fees to accurately reflect actual costs and banning fees, except for network charges, for vulnerable customers.
• Requiring providers to ensure hardship customers are financially no worse off than if they were on the providers’ lowest cost plan, deemed as a “better offer”.

Government’s ‘free’ electricity plan pricing revealed

The AER has today also unveiled the benchmark prices for the government’s “Solar Sharer Offer”, which offers free electricity for three hours in the middle of the day, available to households with a smart meter from 1 July. 

The free electricity window in NSW and south east Queensland will be 11am to 2pm (regardless of daylight savings). In South Australia the window will be 12pm to 3pm.

While the proposed annual cost of the Solar Sharer Offer for a typical household is higher than the benchmark flat rate pricing in two of the five networks – NSW’s Ausgrid and Endeavour – the prices are based on a household using a modest amount of their electricity in the free window. 

Households who can use noticeably more power in the free window could well come out ahead compared to a flat rate plan which charges the same price regardless of what time of day you use the electricity, however this will vary between households.

Source: AER. Based on domestic flat tariff for the 2026-27 financial year for a residential property without a controlled load. The AER’s average household electricity use is determined by the regulator and varies across networks.

Households should not wait

While the proposed prices are a drop, Canstar analysis shows eligible households could save far more in a year by switching to a better priced plan. 

Source: Canstar - 19/03/2026. Based on single rate electricity plans on Canstar's database; excluding solar-only plans. One product shown per distribution network. Annual costs calculated based on the estimated lowest possible price a representative customer would be charged in a year, assuming all conditions of discount offered (if any) have been met. Representative customer based on the reference usage for NSW, VIC, QLD, ACT, and SA (per Victorian default offer for VIC, ICRC for ACT, and AER for others) or the median usage in the Office of the Tasmania Regulator's report, Typical Electricity Customers in Tasmania 2025 for TAS.

Canstar’s data insights director, Sally Tindall, says, “This is the one of the first pieces of good news we’ve had on prices this year, and the relief so many Australian households desperately need now the electricity rebates are over.”

“This proposal from the regulator could put over $200 a year back into household budgets for those living in south east Queensland and regional New South Wales on a default plan.

“The tide is finally turning on electricity costs, with the Victorian regulator also proposing drops across its networks. Wholesale generation costs and environmental fees are falling across the country and it’s finally delivering savings, not just for consumers but also small businesses. 

“However, it’s important to treat these figures with cautious optimism, particularly with the price pressures coming from the conflict in the Middle East. 

“The triple-digit savings slated might not make it to the finish line in May when the final determination is handed down.

“In the meantime, customers who can shop around, should be doing exactly that. The regulator’s benchmark prices are highly uncompetitive and primarily meant to serve as a safety net.

“Canstar research shows that if a typical household in Sydney switched from an average-priced plan to the lowest, then they could potentially save up to $271 in the next year.

“The proposed Solar Sharer Offer prices released by the AER today are, for a typical household, on par with the default flat rate benchmark. However, households who can strategically shift more of their electricity use to the middle of the day might well come out ahead compared to a flat rate plan.

“Today’s proposed prices are a clear signal from the regulator that the energy transition isn't just about how we generate power, but how and when we choose to use it.”

Source: AER. Prepared by Canstar. 

Source: AER, prepared by Canstar. Based on domestic flat tariff for the 2026-27 financial year for a small business without a controlled load. The AER’s average small business electricity use is determined by the regulator and varies across networks.