For small businesses on a standing offer, the regulated benchmark just fell. That’s good news, but the benchmark is a ceiling, not a deal.
Business electricity prices in Australia shifted again in 2026. If you run a small business, you may have seen headlines about electricity prices dropping in July. They’re broadly correct: from 1 July 2026, the regulated benchmark prices that cap standing-offer electricity fell across most of the country. But a lower benchmark is easy to misread. It tells you the most a retailer can charge you on a default plan, not whether you’re actually on a competitive one.
Here’s what changed, what it means for your bill, and the questions worth asking before your next renewal.
What changed on 1 July 2026?
Two regulated reference prices reset every year on 1 July, and both came down for 2026–27:
- The Default Market Offer (DMO), set by the Australian Energy Regulator (AER), covers small customers in New South Wales, South East Queensland and South Australia. For small businesses, standing-offer prices fell by roughly 9–21% in NSW, 10–14% in South East Queensland, and 7–12% in South Australia, depending on whether the plan is a flat rate or time-of-use.
- The Victorian Default Offer (VDO), set by Victoria’s Essential Services Commission (ESC), covers small customers across Victoria’s five distribution zones. It fell by an average of about 6% for small businesses, roughly $241 a year for a typical business using 10,000 kWh, with the saving ranging from about $177 to $302 depending on your zone.
Both are standing-offer benchmarks. If your business has never actively chosen a plan, or signed up years ago and never looked again, there’s a good chance you’re sitting on, or close to, one of these default prices.
What the DMO and VDO actually are (in plain English)
Think of the DMO and VDO as a safety net. They set the maximum a retailer can charge a small customer on a standing (default) offer, and they exist so that businesses who don’t shop around still get a “fair-ish” price rather than an open-ended one.
Each year, the regulator rebuilds that benchmark from scratch. It takes twelve months of movement across every part of the bill, wholesale energy, network (poles and wires) charges, environmental scheme costs, and retail costs, then rolls them into a single reflective price. For 2026–27, the main reasons prices fell were lower wholesale and environmental costs, helped along by record renewable output and a rapidly growing fleet of grid batteries pushing down daytime and evening wholesale prices.
That bundling is the important part. Because the benchmark moves all components at once, a falling DMO or VDO can hide what’s happening underneath, including network charges, which are often the single largest line on a business bill.
Why a Lower DMO or VDO Doesn’t Mean You’re Getting a Good Deal
This is where a lot of businesses lose money without realising it.
The DMO and VDO are deliberately set as a ceiling, not a sharp market price. Competitive market offers almost always sit below the benchmark. So if the news says “prices fell 10%,” but you’re still on a standing offer, all that’s really happened is the ceiling came down. You may still be paying well above what a reviewed, negotiated plan would cost.
It’s the energy version of a loyalty tax. The longer a business stays on the same default arrangement, the more likely it’s drifted away from the best available pricing, and a benchmark cut can make a stale plan feel like a win when it isn’t.
New Electricity Consumer Protections from 1 July 2026
A few rule changes also took effect on 1 July 2026 that work in your favour:
- One price rise a year. Retailers can no longer increase prices on a plan more than once in a 12-month period, with mid-contract hikes off the table. That makes your costs easier to predict.
- Fairer fees. Excessive late-payment fees are out, and every customer must be offered at least one fee-free way to pay.
- No more expiry trap. When a discounted offer ends, a retailer can’t quietly move you onto something more expensive than the standing offer.
These are helpful guardrails, but they’re a floor on bad behaviour, not a substitute for being on the right plan.
So why does my business electricity bill still feel high?
If prices fell but your bill hasn’t, a few things are usually going on:
- You’re on a standing offer rather than a reviewed market contract.
- Your network charges, which the benchmark bundles away, make up a large share of the bill and are driven by how and when you use power, not just how much.
- Your usage has changed (new equipment, longer hours, electrification, EV charging) and your plan no longer fits.
- You’re comparing on the headline rate alone, when supply charges, demand components and contract terms decide the real cost.
Any of these can be at play at once. We walk through and how to diagnose each one.
What to Do Before Your Business Energy Contract Renewal
The July reset is a natural prompt to check whether your business is actually on a competitive arrangement. A few questions to start with:
- Are you on a standing offer or a chosen market contract, and when does it expire?
- When did you last compare your plan against what’s available now?
- Has your load or operating pattern changed since you signed up?
- Are you comparing on total annual cost, including supply and network charges, not just the usage rate?
- For multiple sites, are you reviewing each one, or assuming they’re all fine?
How Selectricity helps
Selectricity is an independent commercial energy broker and consultant. We do the comparison work for you: checking whether your current plan stacks up against the market, validating that you’re being charged correctly, and recommending a move only when it’s genuinely worth it.
Our focus isn’t the cheapest click on a comparison site. It’s an evidence-based, defensible decision you can stand behind: the right plan for how your business actually uses energy, explained in plain English. We work with businesses of all sizes across the National Electricity Market: New South Wales, Victoria, Queensland, South Australia, Tasmania and the ACT.
Get an Independent Plan Review
Frequently asked questions
What is the Default Market Offer (DMO)?
The DMO is a regulated reference price set each year by the Australian Energy Regulator. It caps what retailers can charge small customers on standing (default) offers in New South Wales, South East Queensland and South Australia, and resets on 1 July.
What is the Victorian Default Offer (VDO)?
The VDO is Victoria’s equivalent of the DMO, set by the Essential Services Commission. It caps standing-offer prices for small customers across Victoria’s five distribution zones and also resets on 1 July.
Did business electricity prices go down in July 2026?
For small businesses on standing offers, the regulated benchmarks fell, by roughly 7–21% across the DMO regions and about 6% on average under the Victorian Default Offer. Whether your bill falls depends on the plan you’re actually on.
If the benchmark fell, why is my business electricity bill still high?
Because the benchmark is a ceiling, not a competitive price, and it bundles network charges that may not have fallen at all. A business on a stale standing offer can still be overpaying even after a benchmark cut.
Should a small business on a standing offer switch?
Often, yes. Market offers usually sit below the benchmark. The right move depends on your usage, contract timing and total cost, which is what an independent review checks.
Do the DMO and VDO apply to large businesses?
No. The DMO and VDO only cover small customers on standing offers. Larger commercial and industrial businesses buy energy on negotiated contracts, where the main July change is the network/distribution tariff, a separate topic we cover in our large-market update
How often do business electricity prices change?
The regulated benchmarks are reset annually for 1 July. Market contract prices depend on your agreement, and network charges are updated each year once the AER approves them.
Sources: AER Default Market Offer 2026–27 (DMO 8) Final Determination, 26 May 2026; ESC Victorian Default Offer 2026–27 Final Decision; AEMC retail energy reforms effective 1 July 2026; AEMO Quarterly Energy Dynamics Q1 2026. Figures are indicative and vary by distribution zone, tariff type and usage. Information current as at June 2026.
