Electricity prices are set to drop in three states — what this means for you

Power prices in NSW, south-east QLD and South Australia could fall by more than 10% for households and small businesses.

The Australian Energy Regulator (AER) has released draft price changes for customers on a Default Market Offer (DMO), which is updated each year on 1 July.

The DMO sets the maximum price energy providers can charge for a basic electricity plan (known as a standing offer) in NSW, south-east QLD and South Australia.

You will likely be on a standing offer if you have never switched providers or actively chosen a specific plan. Or, if you have recently moved into a new property without signing a contract with a retailer.

What are the new electricity price changes proposed?

It looks like those on a standing offer plan in south-east QLD will see the biggest price drop in the double digits.

Here's a look at what's changing:

• NSW: Residential prices will decrease by 2.4% to 8.2% ($58 to $226), while small business prices will fall by 7.6% to 21.2% ($379 to $1,320), depending on the distribution zone.
• South-east QLD: Residential prices will decrease by 10.1% ($216), and small business prices by 12.8% ($550).
• South Australia: Residential prices will decrease by 1.3% ($31), while small business prices will fall by 15.2% ($845).

Keep in mind that these are draft prices. A final decision won't be made until May 2026.

Last week, the Essential Services Commission, which regulates electricity prices in Victoria, proposed a price drop of $43–$48 for households and $172 for small businesses.

What about those who aren't on a standing offer plan?

If you've actively chosen an electricity plan, you're likely on a market offer - which is great!

While market offers aren't directly regulated, they're linked to the DMO. It serves as the official "reference price," which retailers use to advertise discounts, such as plans marketed as "15% below the reference price."

This creates a common benchmark, making it easier to compare plans.

Ultimately, it's up to retailers like AGL, Origin Energy and EnergyAustralia whether they pass on savings in their next pricing cycle.

In theory, if the DMO drops, a market offer tied to it will drop too, unless the retailer reduces your percentage discount.

Why are electricity prices falling, especially given global uncertainty?

The drop in power prices is mainly due to lower wholesale electricity costs and reduced environmental and retailer operating expenses.

This draft decision was prepared before the recent volatility in global markets due to escalating tensions in the Middle East.

Prices could still change before the final decision in May, particularly if gas costs shift, since electricity prices are closely linked to gas.

AER chair Clare Savage also remains cautious.

"This draft decision points to the potential for some welcome relief for households and small businesses after several years of rising energy costs following Russia's invasion of Ukraine," AER chair Clare Savage said in a media release.

"While Australia continues to invest in new sources of renewable energy, our electricity system remains significantly exposed to the international price of fossil fuels such as coal and gas," she said.

The wholesale cost of electricity, included in this draft decision, was calculated prior to the commencement of the current conflict in the Middle East. Since the conflict began, we have seen increases in the price of forward wholesale electricity contracts for 2026-27.

"We will continue to monitor this closely before making our final determination of the Default Market Offer in May."

You can read our explainer for more context on how rising Middle East tensions could impact energy bills.