Observations on the DMO

The Australian Energy Regulator, following a request from the Federal Minister for Energy, implemented a Default Market Offer (DMO) from 1 July 2019. These DMOs have replaced the retailer-determined standing offers previously available.

The Default Market Offer regime has been in place for 3 months now, allowing for a few observations:

•    The majority of electricity retailers have basic offers that work out within a dollar of the South Australian DMO Reference Price of $1941 for 4000 kWh used over a year (for a household without controlled load for hot water).
•    Most retailers also offer lower prices. Some work off base prices and talk about a percentage off the Reference Price (that is off both usage AND supply); others show lower base prices that may differ from offer to offer. All offers must now show a percentage comparison to the Reference Price for 4000 kWh/year.
•    Because the retailers do charge different daily supply and kWh tariffs, the price differences widen a little if a household’s usage is higher or lower than 4000 kWh per annum.
•    AGL offers up to 12% off the DMO price; Origin offers up to 15% off.
•    Several retailers are offering “bonus” or “sign up” credits”, such as “$100 credit on your first bill” or “$25 credit after 12 months”. Others offer sweeteners such as sports streaming or airline loyalty points. These inducements are not included in the DMO discount calculations.
•    In an attempt to outmanoeuvre the competition, a number of offers have been updated several times already.
•    Some small retailers (eg Powerclub, Powershop, Amber Electric) are trying a different sort of offer, which allows the customer to pay a fee for retail services and buy electricity on the variable wholesale market, rather than at set retail prices.

One more important observation: quoted prices must now include GST, when previously GST was added at the end of the bill, so when you look at post-1 July bills it may seem as though base prices have risen by 10%. Don’t panic – they haven’t! It’s just the GST.

Back to News