Confused by energy bills? Learn the difference between the Reference Price and your plan, and discover how to use this benchmark to find cheaper energy rates.
Published on 07/01/2026
By Pallav Verma
Energy Comparison
Navigating the Australian energy market can sometimes feel like trying to read a map in a foreign language. You see discounts, usage rates, supply charges, and a variety of technical terms that make it difficult to know if you are actually getting a good deal.
One of the most critical tools you have as a consumer is the Reference Price. This benchmark was introduced by regulators to improve transparency and provide a clearer basis for comparison of energy plans. But knowing the number exists isn't enough; you need to know how to measure your current plan against it to see if you are saving money or paying a premium.
This guide will break down exactly what the reference price is, how it differs from your specific plan, and how you can use this information to compare energy providers and potentially lower your bills.
To understand if you are getting a fair deal, you first need a standard to measure against. In the energy sector, this is the Reference Price.
In New South Wales, South Australia, and South-East Queensland, this is known as the Default Market Offer (DMO). In Victoria, it is called the Victorian Default Offer (VDO). These are prices set by energy regulators (the Australian Energy Regulator and the Essential Services Commission) to set price caps for standing offers an energy retailer can charge a customer on a standing offer.
Think of the Reference Price as a safety net. It protects consumers from being charged excessive rates if they haven't engaged in the market recently. However, it also serves as a crucial benchmark for comparison. When you see an advertisement saying "10% less than the reference price," it allows you to instantly compare that offer against others, regardless of how they structure their specific usage and supply charges.
When you shop for energy, your brain is actually processing two different types of price anchors:
By relying on the External Reference Price, you remove the guesswork. You aren't just comparing a new plan against your memory of an old bill (which might have been high to begin with); you are comparing it against a regulated standard of value.
Your "plan or offer" refers to the specific contract you have with your retailer. It includes your specific daily supply charge (the cost to have power connected to your home) and your usage rates (the cost for every kWh of power you use).
To determine if your current plan is competitive, you need to measure it against the reference price.
If your plan is priced below the reference price, it is generally considered a competitive market offer. The further below the reference price a plan sits, the more likely it may indicate better value for an average household, depending on usage, tariffs and plan conditions.
For example, if you compare energy rates and find Plan A is equal to the reference price, but Plan B is 18% less than the reference price, Plan B is mathematically the cheaper option for the average household usage profile.
One of the biggest risks for Australian consumers is the "loyalty penalty." This occurs when you stay with the same provider for years without checking the market. Often, introductory discounts expire, and you may unknowingly drift onto a plan that is priced at or even above the competitive market rates.
If you haven't looked at your bill in over 12 months, there is a high chance your current rates have crept up. It is vital to check if you are paying the loyalty penalty and compare your current costs against the latest market offers.
Since regulatory changes were introduced, energy retailers must be transparent about how their prices stack up. When you compare gas and electric plans, you will typically see a statement like:
This can be a helpful starting point when comparing plans. You don't necessarily need to be a mathematician to work out the cents-per-kilowatt-hour difference between two complex plans. If one plan is 5% less than the reference price and another is 15% less, the second option offers a significant discount relative to the benchmark.
However, keep in mind that the reference price is based on an "average" usage amount. What is the average power bill in Australia? It varies by state and household size. If you are a heavy user (e.g., you have a pool and five bedrooms), or a light user (e.g., a single-person apartment), your actual percentage of savings may differ slightly from the advertised rate.
You shouldn't wait for a bill shock to check your plan. There are specific times when comparing your plan against the reference price is most beneficial:
While the concept of the Reference Price is most heavily publicised regarding electricity, you should apply the same scrutiny when you compare gas elec bundles.
Many households choose to bundle their energy for convenience, but it is important to ensure you are getting value on both sides of the equation. Don't let a great electricity discount distract you from high gas rates. When performing a gas electric comparison, look at the standing offers and discounts for both fuel types independently to ensure the total package offers genuine value.
If you live in NSW, local infrastructure arrangements and wholesale market conditions can influence pricing. Reading up on choosing the best energy plan in New South Wales can provide localized insights into what constitutes a good deal in your state.
The gap between the Reference Price and your specific plan is where your savings live. If your current plan is hovering near the reference price, you are likely paying for the convenience of not switching.
The energy market is designed to be competitive, but it relies on you, the consumer, to take action. By using the reference price as your anchor, you can strip away the marketing noise and see the true value of an offer.
You deserve to get a better deal on your utilities. That’s why we’ve done all the hard work - so you don’t have to! Simply click on the product you would like to compare. We will then ask you a few small details to understand your situation and provide you with a selection of plans and providers to help you save money.
