The Electricity Reference Price & Default Market Offer
Confused by the reference price? Below we have a breakdown of what the electricity reference price is, where it's used, and how you can use this price reference to your advantage.
What is the Reference Price for Electricity?
The electricity reference price is a price that appears on energy offers in Australia and is used as a benchmark for how much your energy should cost.
The reference price, or Default Market Offer (DMO), works similarly to a price cap and helps protect and inform consumers about the true cost of energy. The Default Market Offer replaces the old Standing Offer from the government.
What is the Reference Price Used for?
There are two main functions of the reference price:
- To protect customers
- To inform customers
The energy reference price protects customers from paying more than the true value of their energy by acting as a price cap.
For example, if you decide not to involve yourself with price comparisons and switching, you will be placed on the government’s Default Market Offer. This is is the same as the reference price and acts as a price cap meaning you are safe from overpaying.
The reference price is also used to inform consumers by showing them much they can save by switching plans or providers or helping them realize if they are overpaying. On energy offers, you will often see “X% off the reference price”.
Although consumers on the Default Market Offer are protected from paying more than the Market Offer, electricity providers are allowed to make other offers that are higher than the DMO. You may see this example if providers offer you value-added incentives such as yearly credits or a very high feed-in tariff.
Should you find yourself in a dispute with your supplier, consider contacting the energy ombudsman for assistance resolving your dispute.
Where is the reference price used?
The electricity reference price can be found in the following states:
In Victoria, however, the Victorian Government uses what is known as the Victorian Default Offer which is more or less the same as the Default Market Offer.
The Default Market Offer replaces the Sanding OfferPrior to July 2019, customers who chose not to engage in price comparisons on the energy market were placed on the government’s Standing Offer which was often the most expensive plan available. The Default Market Offer was first launched in July of 2019, to combat companies placing families on high energy tariffs.
How Do I Know if I Am on the Default Offer?
If you were on the Standing Offer before July 2019, you were likely automatically switched to the government reference price once they came into effect.
If you have lived at the same address for a while and haven’t shopped around and switched providers then you’re probably on the reference price. While you are well within your right to remain on this offer, knowing the prices won’t increase exponentially, switching to a provider’s market offer could potentially save you $200 or more per year.
Default Market Offer vs. The Reference Price
The default market offer and the electricity reference price are the same.
The reference price can also be known as:
- The Default Market Offer
- The Victorian Default Market Offer
What is the Default Market Offer (DMO)?
The Default Market Offer (DMO) is the maximum annual price that households & small businesses can be charged by their energy retailer for their electricity when on a "standing offer" energy plan.
The DMO is regulated by the Australian government and set based on your energy distribution zone (the Energy distributor in the area where you live).
The DMO changes based on a number of factors including the usage and supply charges in each area. Therefore, the DMO may be different in different distribution networks within the same state.
The DMO is also the reference price used in South Australia, New South Wales, and South-East Queensland:
|Distribution Network||Annual estimated usage||DMO on a Flat-Rate tariff|
|Ausgrid (NSW)||3,900kWh / year||$1,393 / year|
|Endeavour (NSW)||4,900kWh / year||$1,609 / year|
|Essential (NSW)||4,600kWh / year||$1,907 / year|
|Energex (QLD)||4,6000kWh / year||$1,455 / year|
|SA Power Networks (SA)||4,000kWh / year||$1,716 / year|
*Source: AER - Default Market Offer - Price determination 2021 Final Determination
What Is the Victorian Default Offer (VDO)?
The Victorian Default Offer is an electricity price that is set as a benchmark by the government to provide a reference for fair energy prices for all Victorian consumers.
Like the DMO, the VDO electricity price is the capped energy price for consumers who don’t wish to engage with the energy market or switch to a provider’s Market Offer. The VDO also functions as an electricity reference price as in the rest of Australia and is set based on the distribution zone where you live.
See the Victorina Default Offers by distribution zone below:
|Distribution Network||VDO on a Flat-Rate tariff|
|AusNet Services||$1,507 / year|
|Citipower||$1,270 / year|
|Jemena||$1,328 / year|
|Powercor||$1,368 / year|
|United Energy||$1,319 / year|
*Source: Victorian Essential Services Commission, 2021. Prices based on average annual usage of 4,000kWh/year
How to Find Plans That Are Cheaper Than the Reference Price
Legally, providers need to state the difference between their offer and the reference price when showing their plans.
When comparing energy plans online, they will ask you to enter your postal code, address, and exact energy consumption in Kwh from a recent bill or from your smart meter. This information allows providers to offer you the most accurate quote.
When looking at a provider’s plan, look for the following information:
- How much less the provider’s plan is when compared to the reference price (often shown as X% off the reference price)
- Any conditional discounts, shown separately from the percentage off the reference price, such as pay-on-time or direct debit discounts
- Any other incentives such as annual credits or rewards program points
- The lowest annual cost you can expect to pay for your electricity, with all discounts applied, based on the average usage for the distribution zone
- Supply and usage rates for the plan, as well as solar feed-in-tariff
- Other plan details such as benefit periods, additional fees, type of rates (fixed or variable), GreenPower or carbon-neutral options, and billing and payment options
In the table below you can see all the plans cheaper than the energy reference price in your state:
|Cheapest Enery Plans by State|
|Plans cheaper than the reference price NSW|
|Plans cheaper than the reference price QLD|
|Plans cheaper than the reference price SA|