June 12, 2026
The Australian Energy Regulator’s (AER) Default Market Offer (DMO) 8 and the Essential Services Commission’s (ESC) Victorian Default Offer (VDO) have both arrived at Final Decisions for the 2026-27 pricing period. The DMO and VDO act as regulated benchmark prices for electricity supplied to small customers, via standing offers from 1 July 2026.
Both frameworks serve two primary functions:
- Establishing a price cap for standing offers
- Providing a reference price for comparing retail market offers
The Default Market Offer applies in New South Wales, Southeast Queensland and South Australia, while the Victorian Default Offer applies only within Victoria. These determinations remain a critical regulatory reference point for Embedded Network Owners and Operators, where on-selling electricity to customers in jurisdictions where default offers apply directly or indirectly. This year’s pricing provides relief to customers with reductions across most jurisdictions, including in Victoria. However, Operators will need to monitor closely what continuing decreases in pricing will do to their financial performance and sustainable operation.
Below we provide a summary of the main pricing outcomes for both.
The Default Market Offer is an annual price cap designed to protect residential and small business customers on standing offers who do notengage in the retail market. This year’s review and final determination includes several directional indicators for DMO 9, and changes to what falls under this framework.
From 2026–27, the framework incorporates reforms that:
- Require the Australian Energy Regulator to set tariff caps and annual prices
- Introduce regulated and non-regulated tariff categories
- Establish comparison prices for all tariffs
- Introduce a new Solar Sharer Offer (SSO) tariff category
For 2026–27, the AER has determined there will be price decreases across most regions and customer types, with some increases in South Australia for Residential customers summarised as below:
- New South Wales: –3.4% to –5.0%
- South East Queensland: –7.2%
- South Australia: +1.4% increase
- New South Wales: –9.0% to –11.3%
- South East Queensland: –10.4%
- South Australia: –6.8%
With many changes occurring through DMO 8 via updates to the Electricity Retail Code, it is important to note that these reforms do not yet apply to embedded networks. However, the Australian Government has indicated intent to extend these provisions to embedded networks from 2027–28 (DMO 9). This provides a consistent message that customer protections and offerings are moving closer towards regulatory alignment between embedded networks and the rest of the market.
As the regulated standing offers begin to expand, customers may place more pressure on embedded providers to develop and offer more than asingle tariff option for their services. With the AER’s revised methodology and considerations applying to this DMO 8, it will also provide insight for the potential future DMO’s and those looking to plan ahead should consider a detailed review of the AER’s available information as part of this pricing update.
Unlike the DMO, the Victorian Default Offer explicitly applies to embedded networks with approximately 182,000 embedded network customers impacted by it’s pricing outcomes. Embedded network providers may charge at or below the Victorian Default Offer price cap.
Serving a similar purpose to that of the AER’s DMO, the ESC’s Victorian Default Offer sets:
- a maximum price retailers can charge for electricity in Victoria
- a reference price for market offers
- a price cap directly applicable to most embedded network customers
The Essential Services Commission determined that:
The average annual domestic bill will decrease by $84 (5%)
The average annual small business bill will decrease by $241(6%)
Depending on which distribution zone a customer falls in,the impacts will vary from $160 to $50 for residential customers while smallbusiness reductions will range from $502 to $151 depending on zone.
Unlike the AER’s revised approach, the ESC has taken a consistent approach to that of previous years and did not vary it’s methodology from their Draft decision. However, the final decision has resulted in an lower average bills that was initially tabled. Unlike market offers from Retailers,embedded network customers are protected by the VDO pricing with providers unable to price above this default offer.
The 2026–27 determinations reinforce the role of regulated default offers as an important pricing signal that all Embedded Network operators must be across to remain compliant when invoicing their customers.Ensuring that you have a strong grasp on your financial feasibility and the impact of pricing changes is crucial to sustainable operation. Those who are proactively managing their retail contracts and looking ahead to plan for pricing change at the customer level, can protect themselves from the volatility of price caps and signalling.
Unfortunately, many embedded networks are operated on the basis of the simple premise that electricity cost in and cost out will determine financial performance and sustainability; without an experienced eye to identify, track and monitor all relevant costs, opportunities can be missed and financial pressure can mount.
This is particularly relevant for many embedded network operators in NSW where IPART’s revised maximum prices and billing standards have been tabled, although not commencing from 1 July 2026. With consultation likely to begin soon, those engaging with the DMO for their embedded networks in NSW may like to consider formulating their notes for possible submissions and feedback as this process is explored.
You can read more about the in-depth changes in approach to the DMO via our previous article, located HERE.
If you’re unsure about the impact of the DMO or VDO pricing changes for your embedded network, reach out to our team via the link below – we’re happy to help.
AER DMO Final Determination
ESC VDO Final Decision
AER Compliance Bulletin
