Understanding the DMO Cost of Living Rise in Australia

How the Default Market Offer Influences Your Energy Bills  

Energy prices in Australia have been on a steady incline, and for many households and small businesses, the cost of living pressures are becoming harder to ignore. With the Default Market Offer (DMO) set for the 2025–26 fiscal year, it’s crucial to understand what this means for your electricity bills, particularly in regions like New South Wales (NSW), South East Queensland (SEQ), and South Australia (SA).  

This article breaks down the DMO changes and their impact, explains the driving factors behind rising costs, and provides actionable steps to help you stay on top of your energy expenses.  

If you're unfamiliar with energy jargon or just want to make better decisions, rest assured—we've got you covered.  

Note: This information is general in nature and does not consider your personal circumstances. Please seek independent advice before making energy-related financial decisions. 

What Is the Default Market Offer  

The Default Market Offer (DMO) serves as a price cap for electricity tariffs, ensuring that no consumer on a standard retail plan pays outrageously high rates. Set by the Australian Energy Regulator (AER), the DMO provides a stable benchmark for comparing electricity prices across providers, empowering you to find fair deals. While this offer guarantees consumer protection, any hikes in DMO pricing translate into tangible cost increases for Australian households and businesses. 

Starting 1 July 2025, this update is a key player in shaping power costs in the affected states.  

Key Takeaways About the DMO  

• Regions Covered: NSW, SE Queensland, and SA  
• Focus: Benchmark pricing for residential and small business electricity plans  
• Impact: Encourages market competition while setting fair maximum prices  

Residential DMO Price Adjustments for 2025–26  

The revised DMO comes with varied increases depending on your location and energy usage, covering consumption ranges of 3,900–7,000 kWh annually.  

Here’s a snapshot of the changes across the major regions covered by the DMO:  

Summary of Residential Price Hikes  

*Real percentages account for inflation, with Consumer Price Index (CPI) set at 2.4%.  

Finding these numbers concerning? Comparing electricity charges could be your first step toward cost savings. Use tools like ElectricityProvider to explore your options today. 

Small Business Price Adjustments for 2025–26  

If you operate a small business, brace yourself for steeper increases. With an annual energy use ranging from 10,000–20,000 kWh, the rise in DMO benchmarks can significantly impact operational budgets.  

Summary of Small Business Price Hikes  

These changes underline the importance of periodic power rates comparison for small businesses, particularly for energy-heavy industries.  

Source: AER – Default Market Offer prices 2025–26: Final determination, 26 May 2025, Table 2.1.

Why Are Energy Costs Rising  

To understand these price hikes, we need to explore the factors driving these changes. The 2025–26 DMO rises aren’t arbitrary; they reflect deeper cost adjustments within the energy market. 

Key Drivers  

1. Wholesale Energy Costs (Up to 45% of Total Bills)  

• Generator Outages and fuel price increases continue to disrupt supply  
• Limited Renewable Output during peak demand compounds this issue  

2. Network Costs (33%–48%)  

• Grid upgrades and safety systems have increased capital expenditures  
• Investment in renewable transition is raising short-term infrastructure costs  

3. Retail Costs (11%–16%)  

• Rollouts of smart meters are improving accuracy but driving operational costs higher  
• Higher instances of unpaid bills (bad debts) increase retailers’ overall expenses  

4. Environmental Costs (Approximately 4%)  

• Federal energy schemes reflect minor cost reductions, which only partially offset other increases  

Solutions to Manage Rising Power Costs  

Rather than letting the upcoming DMO changes dictate your energy expenses, Australian consumers have options. Simple, proactive steps can help ease cost pressures.  

1. Use Energy Comparison Tools  

Switching energy plans remains one of the most effective ways to save. Online platforms like ElectricityProvider.com.au make it easy to compare electricity and find competitive deals tailored to your specific energy usage.  

2. Maximize Government Rebates  

Through the Energy Bill Relief Fund, eligible households received $300 off their bills in 2024–25, and a new $150 credit is being rolled out from 1 July 2025, split across two instalments. Eligible small businesses may also receive $150 in support. 

No need to apply—if you qualify, the discount is applied automatically to your power bill. 

Source: energy.gov.au 

3. Leverage Retailer Programs  

Energy providers often offer hardship programs to customers struggling with high utility bills. Explore these as a fallback option for temporary relief.  

4. Upgrade to Energy-Efficient Systems  

• Invest in solar panels or battery storage capable of offsetting grid power use  
• Use smart meters to closely monitor real-time energy consumption and avoid peak-hour surcharges  

5. Consider Off-Peak Scheduling  

Households on time-of-use plans can reduce costs by shifting high-energy activities to off-peak windows.  

The Cost of Living Impact Behind the Numbers  

Electricity price rises are adding to broader cost-of-living pressures. For the average household in NSW (Essential Energy region), this means an estimated $228 increase in annual electricity costs from 1 July 2025 an uplift of 9.1% compared to last year’s Default Market Offer. 

While SE Queensland and SA have smaller projected hikes, households with lower incomes or higher energy needs are particularly vulnerable. To combat this, consider exploring all discount options or switching to a longer-term fixed-rate plan for stability. 

It’s Time to Take Control of Your Energy Costs  

Don’t wait for price hikes to impact your budget. By understanding the DMO, its changes, and their driving forces, you can make informed decisions to manage your electricity costs instead of feeling powerless against them.