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‘Reference price’ or ‘Default Market Offer’ explained
If you have an electricity plan in NSW, SA, and SE QLD you'll need to know what the reference prices means.
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What is a "Reference Price"
- What is it? A new benchmark electricity price set by the government to help you compare offers. It's also called the Default Market Offer (DMO) and a price cap on your energy bill if you don't actively look for a new plan and your original offer has expired.
- When did it happen? 1 July 2019.
- Who does it affect? Electricity customers in New South Wales, South East Queensland and South Australia. A similar scheme, the Victorian Default Offer, applies in Victoria.
Reference price vs Default Market Offer: What's the difference?
Here are the key differences:
- The Default Market Offer (DMO), is the maximum price that electricity retailers can charge for standing offer plans.
- The reference price similar to the DMO, but it's used as a benchmark on comparison services and provider websites by showing a plans price as a percentage above or below the reference price.
How does the energy reference price affect you?
There are two different types of electricity plans in Australia: standing offers and market offers. It only directly affects standing offer customers.
Firstly, it can cap what you pay.
The energy regulator has set a price cap for standing offers, meaning retailers can't charge customers more than the reference price for standing offers.
This price cap doesn't apply to customers on market offers. However, market offers often include discounts, special prices and cheaper rates than the DMO.
Secondly, i offers a more realistic idea of what you'll pay
Energy retailers in New South Wales, South East Queensland and South Australia used to be able to advertise discounts that were calculated from different base rates. This made it challenging to compare discounts from different retailers.
With the new reference price, electricity retailers must advertise pricing and discounts in relation to the reference price, leading to more transparent pricing and easier comparison. If two retailers offer 20% discounts, you know the discounts are equivalent because they are calculated from the same base rate.
- If you haven't switched plans in a while
- You might be on a 'standing offer', the Default Market Offer will help act as a price cap so that your rates don't rise above a certain value.
Depending on where you live, an average household on a standing offer could save between $129 and $181 per year (with the reference price), and a small business could save up to $896 per year.
- If you are comparing plans
If you're on a market offer, the DMO doesn't directly apply to you. However, retailers show the difference between their plans and the reference price. For example:
| Plan 1 | Plan 2 | Plan 3 |
|---|---|---|
| 5% less than reference price | 10% less than reference price | 15% less than reference price |
Keep in mind, while the reference price helps you compare plans and providers, you might end up paying more or less than the advertised rate depending on your usage.
How to switch energy providers
Standing offers vs Market offers
If you're comparing energy you may have come also across the following terms: Standing offers and Market offers. Our infographic below helps explain the difference.
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Picture: GettyImages
DMO prices effective now
The first DMO came out in 2019. This year it was reviewed again to reflect changes in wholesale prices and that's why you can find 'DMO 1' and 'DMO 2' below.
Residential
| Distribution region | Annual usage | DMO 2 Price | Difference to DMO 1 |
|---|---|---|---|
| Ausgrid | 3,900 kWh | $1,462 | -$5 (-0.3%) |
| Endeavour | 4,900 kWh | $1,711 | -$9 (-0.5%) |
| Essential | 4,600 kWh | $1,960 | +$3 (+0.2%) |
| Energex | 4,600 kWh | $1,508 | -$62 (-3.9%) |
| SAPN | 4,000 kWh | $1,832 | -$109 (-5.6%) |
Residential with Controlled load
| Distribution region | Annual usage | DMO 2 Price | Difference to DMO 1 |
|---|---|---|---|
| Ausgrid | General usage 4,800 kWh + CL 2,000 kWh | $2,024 | -$35 (-1.7%) |
| Endeavour | General usage 5,200 kWh + CL 2,200 kWh | $2,165 | -$1 (0.0%) |
| Essential | General usage 4,600 kWh + CL 2,000 kWh | $2,356 | -$19 (-0.8%) |
| Energex | General usage 4,400 kWh + CL 1,900 kWh | $1,812 | -$115 (-6.0%) |
| SAPN | General usage 4,200 kWh + CL 1,800 kWh | $2,244 | -$176 (-7.3%) |
Small Business without CL
| Distribution region | Annual usage | DMO 2 Price | Difference to DMO 1 |
|---|---|---|---|
| Ausgrid | 20,000 kWh | $7,240 | -$131 (-1.8%) |
| Endeavour | 20,000 kWh | $6,177 | -$27 (-0.4%) |
| Essential | 20,000 kWh | $8,041 | -$4 (0.0%) |
| Energex | 20,000 kWh | $5,760 | -$265 (-4.4%) |
| SAPN | 20,000 kWh | $8,305 | -$815 (-8.9%) |
Frequently asked questions
Is the DMO the cheapest option?
Not necessarily. The DMO only applies to standing offers. Depending on where you live and your energy use, a market offer could be much cheaper than the DMO. Make sure to shop around and compare a range of providers to see if there is a cheaper option.
How do I know if I am on a standing offer or market offer?
If you're not sure what type of offer you're on, you can check your latest electricity bill or contact your energy retailer and ask.
Typically, customers who have had the same retailer for years and haven't changed their plan during this time are likely on standing offers.
Does my pay-on-time discount still apply?
It depends on the type of plan you're on. The reference price changed the way retailers are required to advertise discounts, but the specific discounts available to you depend on the plan and the retailer.
To find out what discounts apply to you, contact your retailer directly.
What about other states?
The Victorian government introduced a price cap for the state on 1 July 2019, also known as the Victorian Default Offer (VDO). The VDO works similarly to the DMO as a maximum price for standing offers.
The electricity markets in Tasmania, Western Australia, Northern Territory, regional Queensland and the Australian Capital Territory are regulated by state governments and other authorities.
Does the reference price apply to gas or solar?
No, the reference price only applies to electricity plans .
How you can use the reference price to compare energy prices
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