Understanding the Energy Business Price Rise and How to Stay Ahead of the Impact

Small business electricity prices in Australia are set to rise across different states starting 1 July 2025. Changes under the Default Market Offer (DMO) and Victorian Default Offer (VDO) regulations are on their way, impacting businesses relying on essential power supplies. This guide breaks down what’s changing, why it’s happening, and how you can take actionable steps to manage your electricity costs effectively.  

With wholesale electricity costs increasing, network charges rising, and operational expenses climbing, understanding how these changes affect your business is crucial. Whether you're looking to compare power rates or switch to a better electricity plan, preparation is key.  

Note: This information is general in nature and does not consider your objectives, financial situation or needs. Please consider your circumstances before making any decisions. 

What is driving the small business electricity price rise?  

Electricity prices don’t rise at random. The increase in prices for FY2025–26 is the result of several well-documented factors affecting the energy landscape in Australia. Key drivers include wholesale electricity costs, distribution infrastructure, and rising retail operational expenses. Below, we’ll take a closer look at these contributing elements.  

Rising Wholesale Electricity Costs  

Wholesale electricity costs form the backbone of your energy bill. These are the prices energy retailers pay to generators, playing a dominant role in what you ultimately pay for power. Drivers of wholesale cost increases include:  

• Higher demand due to growing electricity usage in Australia.  
• Generator outages, which disrupt the energy supply and create temporary shortages.  
• Lower renewable output due to weather variability impacting solar and wind generation.  

Growing Network Charges  

Electricity distribution requires ongoing infrastructure investments. Any cost incurred by distributors for maintaining or upgrading poles, wires, and substations gets directly passed to retailers and, consequently, you. The rising network charges are driven by the need to support reliable electricity delivery, even with the evolving demands of modern businesses.  

Increased Retail Costs  

Retailers have faced rising levels of operational expenses tied to customer care and administrative services. This has caused retail charges to creep upwards, resulting in higher prices for their customers.  

Electricity price changes for small businesses in FY2025-26  

Both the Default Market Offer (DMO) and Victorian Default Offer (VDO) set regulated price ceilings for standing energy offers. These price caps serve as benchmarks for businesses that haven’t switched to market-leading energy plans.  

Default Market Offer (DMO) price changes for small businesses  

The Australian Energy Regulator (AER) oversees the DMO across most states, with the following changes set for FY2025-26.  

• New South Wales (NSW): Expected annual increases of up to $355 depending on region and usage.  
• South East Queensland (SE QLD): Moderate increases anticipated, ranging from 0.8% to 8.5%.  
• South Australia (SA): Up to $355 per year increase across different regions.  

Source: aer.gov.au  

Victorian Default Offer (VDO) price changes for small businesses  

For Victoria, the Essential Services Commission (ESC) regulates the Victorian Default Offer (VDO). The average projected increase is around $90 annually (approximately 3%), bringing the average annual bill to $3,620 for businesses using 10,000 kWh per year.  

Key Drivers for the VDO price changes:  

• Wholesale electricity costs remain elevated due to market conditions and demand fluctuations.  
• Network costs continue to grow as infrastructure demands increase.  
• A slight decrease in environmental costs partially offsets these rising factors.  

Source: esc.vic.gov.au   

A summary table of expected electricity price changes  

Source: aer.gov.au, esc.vic.gov.au   

How businesses can manage rising electricity prices  

Now that you understand why electricity prices are increasing and how these changes impact various regions, the next step is taking control of your business electricity costs. Whether you’re looking to save directly by switching electricity providers or exploring energy-efficient initiatives, these tips will help reduce the effect of price hikes.  

Compare energy plans for competitive rates  

Businesses on a standing offer or outdated market offer may be overpaying significantly for electricity. Comparing energy plans gives you the opportunity to find the most cost-effective rates tailored to your usage. Comparison platforms like electricityprovider.com.au make it easy to compare and switch providers seamlessly.  

To accurately compare electricity tariffs, consider these metrics when evaluating plans across retailers:  

• Usage rates charged per kWh.  
• Daily supply charges (a fixed daily fee).  
• Eligibility for time-of-use plans for off-peak discounts.  

By comparing available plans, some businesses may reduce their annual electricity costs, depending on usage and eligibility 

Improve energy efficiency in the workplace  

Reducing energy waste doesn’t just lower bills; it also contributes to a more sustainable business model. Key strategies include:  

• Conducting an energy audit to identify inefficiencies.  
• Switching to energy-efficient appliances like LED lighting or air conditioning systems.  
• Investing in smart meters to monitor and manage electricity usage in real-time.  
• Scheduling energy-heavy processes during off-peak hours (if using a Time-of-Use tariff).  

Explore renewable energy options  

Consider incorporating renewable energy sources like rooftop solar panels into your business operations. Solar power systems, combined with battery storage, can significantly reduce reliance on the grid and protect you from fluctuating wholesale electricity prices.  

Bonus tip for Victorian businesses: Look into eligibility for government rebates to offset the initial installation costs of solar systems.  

Review your electricity plan annually  

Electricity markets are dynamic. Prices, discounts, and terms change regularly, meaning that sticking with the same plan could cost your business extra in the long term. Set an annual calendar reminder to review your electricity provider’s rates and compare them to the latest offerings in the market.  

Understand your electricity usage patterns  

Review your bills to identify patterns in your energy consumption. Are you consuming the most electricity during peak hours? Shift and manage your operations to benefit from lower rates during off-peak times where possible.  

Why proactive steps matter  

Failing to adapt to rising electricity costs could leave small businesses struggling to manage their budgets effectively. By staying informed and actively exploring solutions through energy price comparisons or renewable innovations, businesses not only manage costs better but also future-proof themselves against further increases.  

Using tools to compare electricity costs and adopting energy best practices ultimately gives businesses a competitive edge during challenging economic conditions.  

Next steps  

Don’t leave your energy plan on autopilot. Start comparing electricity plans today to ensure your business remains ahead on pricing. Platforms like Electricity Provider provide access to a network of competitive options, tailored specifically to Australian business needs.