The Australian Energy Regulator (AER) and Essential Services Commission (ESC) have released their final decisions regarding the Default Market Offer (DMO) and Victorian Default Offer (VDO) for 2024-25.
But what do these changes mean for Australian businesses?
Understanding the DMO and VDO
The Default Market Offer (DMO) acts as a safeguard against inflated electricity prices for households and small businesses in South Australia, New South Wales, and South-East Queensland. Similarly, the Victorian Default Offer (VDO) serves a similar role for consumers in Victoria, regulated by the Essential Services Commission.
Both default market offers provide a benchmark price that ensures fair electricity rates, helping consumers avoid overpaying in a volatile market. These rates set the maximum that retailers can charge, giving consumers a clear and transparent standard for price comparison.
Default Market Offer (DMO)
Most small business customers could see reductions between 1% and 9%, while some might face modest increases of around 1%, depending on their region.
Victorian Default Offer (VDO)
For small business customers, the average annual bill will fall by $261 (or around 7%) compared to 2023–24 (based on annual usage of 10,000 kWh). The largest reduction in dollar terms is in the AusNet zone, amounting to $386.
The reduced DMO was based on changes in electricity network and wholesale costs, as well as the need to protect consumers after several years of market volatility.
“We know and understand that cost-of-living pressures are front of mind for many households and small businesses, and we will continue to protect customers from unjustifiably high prices,” - Clare Savage AER Chair.
How businesses can deal with changing energy prices
Effectively handling these changes calls for attention and smart planning. Here are key strategies to ensure your businesses remains on competitive rates:
1. Regularly compare plans: Ensure your business is on a competitive energy plan. Despite economic pressures, certain retailers continue to offer better deals than others. Regularly comparing plans can lead to substantial savings.
2. Get expert advice: Consult with energy market experts who can provide personalised recommendations based on your specific business needs and usage patterns.
AER Chair Clare Savage underscored the importance of consumers seeking a plan less expensive than the DMO. “Most retailers have cheaper deals than the standing offer, so shopping around remains the best way to get the best price.”
If you’re currently on a default or standing offer, you don’t need to stick with it. Over 152,000 small Australian businesses are still on default market rates. Most default offer customers aren’t locked in, so you’re free to compare deals and switch to a market offer at any time.
3. Seize seasonal opportunities: Australian energy retailers typically use July 1 as a time to re-evaluate their energy plans, including market offers. Knowing that price-conscious customers may look to change plans in July, many retailers will offer not just competitive rates but also extras like discounts or welcome credits.
So, what’s the next move?
At Zembl, we're committed to securing competitive energy rates for your business. Our team of Energy Experts specialise in energy comparisons for Aussie businesses, ensuring you navigate energy price changes with ease and find a competitive deal.
Fill out the contact form below to see if your rates could be more competitive than what you’re paying now.
*Business numbers taken from Australian Energy Regulator (AER) Default Market Offer (DMO) 2024–25 Draft Determination, and DDP - Victorian Default Offer 2024-25 - Draft Decision. Zembl panel offer percentages based on best available offers from our panel of retailers compared to default market rates in April 2024.
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