Draft DMO 2020-21 open for consultation

wholesale electricity prices

Draft DMO 2020-21 open for consultation The Australian Energy Regulator (AER) has released for public consultation its draft determination on the Default Market Offer (DMO) prices for July 1, 2020 to June 30, 2021.

In releasing the draft determination, AER Chair Clare Savage said consumers should pay no more than necessary for safe and reliable energy.

“The Draft DMO 2020-21 open for consultation was introduced by the Commonwealth Government last year to stop energy retailers charging customers on standing offers unjustifiably high prices – also known as the ‘loyalty tax’,” Ms Savage said.

“Since the DMO was introduced on July 1, 2019 for its first 12-month period, a typical residential standing offer bill has reduced by up to $181. For small business customers, we have seen reductions of up to $896. We have also seen retailer competition remain steady.

“We are now in the process of setting the DMO for its second year and we want to hear from a wide range of stakeholders and consumers in determining our final DMO prices for 2020-21.”

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To stop retailers offering meaningless discounts to customers, the default market offer is also designed to be a reference price for all energy discounts to help make it easier for customers to compare deals.

In its Draft Determination, the AER has adjusted the DMO prices in each area based on how retailers’ costs (such as wholesale electricity costs, network charges and environmental costs) are expected to change over the year. These costs will vary from area to area.

“It’s important for customers to remember the DMO is intended as a safety net for those customers who are not engaged in the market. It is not designed to be the most competitive deal,” Ms Savage said.

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“Most retailers have cheaper deals on offer, so shopping around remains the best way to get a better energy deal. I encourage consumers to visit our free and independent Energy Made Easy website to compare energy deals.”

Consultation is open until March 9, 2020. The final determination for DMO 2020-21 will be published in April 2020.

DMO price from 1 July 2019 per yearProposed change on 1 July 2020Location
$1,467 to $ 1,957$9-$16 higherNew South Wales (depending on distribution zone)
$1,570$86 lowerSouth East Queensland
$1,941$85 lowerSouth Australia

Compared to last year’s DMO prices, our Draft small business prices** for this year are as follows:

DMO price from 1 July 2019 (per year)Proposed change on 1 July 2020Location
$6,204 to $8,045$23 lower to $46 higherNew South Wales (depending on distribution zone)
$6,025$378 lowerSouth East Queensland
$9,120$691 lowerSouth Australia

* Draft DMO 2020-21 open for consultation prices are subject to change before final determination.
** These changes to the default market offer price are based on the amount of electricity a typical consumer would use in a year. This varies by region and customer type. Please note, actual prices will differ depending on the amount of electricity a particular customer uses, where they live and their retailer.