The Australian energy landscape is shifting as the draft determinations for the Default Market Offer (DMO) 2025-26 and Victorian Default Offer (VDO) 2025-26 have been released. Energy customers, particularly residential and small business users, will want to understand what these changes mean for their electricity bills and what options they have to manage costs better. Here's everything you need to know about these draft determinations and their likely impact.
What is the DMO and VDO?
The Default Market Offer (DMO) is a price safety net applied to electricity standing offers in New South Wales, South East Queensland, and South Australia. It acts as a reference price for customers to compare retail electricity offers.
The Victorian Default Offer (VDO) serves a similar purpose in Victoria, acting as a simple and fair electricity pricing option for customers who aren't actively engaged in the market. Both frameworks aim to strike a balance between ensuring affordability and allowing electricity retailers to recover their costs.
These pricing policies are reviewed annually by the Australian Energy Regulator (AER) for the DMO and the Essential Services Commission (ESC) for the VDO to reflect changes in wholesale and network costs.
Key highlights from the DMO 2025-26 draft
The latest draft determination for the DMO, known as DMO 7, outlines upcoming price changes for residential and small business customers.
Residential customers
- Electricity prices for residential customers are expected to rise between 2.5% and 8.9%, depending on the region.
- Drivers of the increase include higher wholesale market costs, network expenses, and inflation.
Small business customers
- Small business customers could see their prices increase between 4.2% and 8.2%.
Why prices are increasing
- Wholesale market costs: Spot prices rose due to higher demand, generator outages, and low solar and wind energy output. These factors also impacted wholesale contracts for 2025-26.
- Network costs: Inflation and higher interest rates are driving increases, with some variations by distribution zones.
- Retail costs: While retail costs are smaller compared to wholesale and network costs, they have also grown due to rising operational expenses for energy retailers.
The consultation period is now open, and stakeholders can submit feedback on the draft determination until 3 April 2025. The final decision for DMO 7 will be published on 26 May 2025, with prices coming into effect from 1 July 2025. For a detailed review of the DMO draft, visit the AER website.
Key highlights from the VDO 2025-26 draft
The draft determination for the Victorian Default Offer indicates a mix of price adjustments across distribution zones in Victoria.
Residential customers
- Annual prices for residential customers could decrease by up to $19 in some zones or increase by up to $68 in others compared to 2024-25.
- On average, residential customers can expect a small rise of $12 (less than 1%) in annual bills. ¹
Small business customers
- Small business customers are likely to see their annual bills rise by $77 to $128, with the average increase sitting at $103 (about 3%). ²
Drivers of change
- Higher wholesale and network costs: These are driving increases for small business customers.
- Lower environmental costs: These have tempered the extent of price rises across all customer types.
The consultation period for the VDO draft is open until 11 April 2025, with the final determination set to be released by 24 May 2025. New prices will take effect from 1 July 2025. For more details on the VDO draft, head to the ESC website.
What these changes mean for you
For both the DMO and VDO, the adjustments reflect underlying cost pressures in the energy market. While the increases may place additional financial pressure on households and businesses, there are actionable steps you can take to minimise their impact.
- Compare energy offers: The DMO and VDO serve as benchmarks, but competitive market offers often cost less. Compare your energy bill with Zembl to find more competitive energy plans and better deals.
- Review your usage: Understanding your energy consumption patterns can help identify areas for saving. Check out our recent guide: 22 energy saving tips for businesses in 2025.
Why staying engaged in the energy market is key
While the DMO and VDO aim to safeguard customers who don’t actively navigate the energy market, the most significant savings come from engaging with available competitive market offers. For example, AER Chair Clare Savage noted that in February 2025, median market offers were 2% to 5% lower than July 2024 prices. The most competitive deals were 19% to 25% cheaper than the current DMO price.
Shopping around for better deals can save you heaps of money, but why do it alone? With Zembl, you can easily compare your bill to ensure you're always on a competitive plan. Don’t wait for retailers to change their prices - take control of your energy costs today and get in touch with us for a comparison.
¹ Change in the average Victorian Default Offer annual bill by cost component, for domestic customers with annual usage of 4,000 kWh, $ nominal.
² Change in the average Victorian Default Offer annual bill by cost component, for small business customers with annual usage of 10,000 kWh, $ nominal.
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