Default Market Offer Shields from Global Energy Price Crisis

Today's release of the final 2023 Default Market Offer (DMO) for electricity confirms the Albanese Government's actions to cap coal and gas prices has limited the worst of last years' forecast electricity price spikes.

While Australian families have been shielded from the worst of the energy price hikes, we know that any increase to bills is difficult for Australian families and businesses.

Which is why the Government has targeted millions of households doing it tough with additional Energy Price Relief Rebates, and is investing in cleaner, cheaper energy over the medium and long term.

The DMO applies from 1 July 2023 to 30 June 2024 and is designed by the Australian Energy Regulator as a benchmark price. It is the maximum price that electricity retailers in NSW, South Australia and South-East Queensland can charge customers from 1 July 2023 - with the vast majority, around 90 per cent, on lower rates.

The increases in DMO prices are up to $492 less than they would have been without the Government's intervention for residential customers and up to $1,310 less than they would have otherwise been for small businesses.

Importantly, the impact of the Government's entire Energy Price Relief Plan means that for the many customers eligible for the targeted Energy Price Relief Rebates, their bills won't increase at all.

For the average household who is eligible for the energy bill rebate in the DMO jurisdictions of Queensland, New South Wales and South Australia, energy bills are expected to be over $800 lower in 2023-24 than without intervention, which is what Dutton and the Coalition voted for.

The International Energy Agency has found that the illegal invasion of Ukraine by Russia caused 90% of electricity price rises around the world, and while the former government changed the law to hide impending price rises before the election, the Albanese Government acted urgently to curb the immediate impact of the global energy crunch.

As part of our plan to ease the cost of living without adding to inflation, the 2023 24 Budget also delivers more than $1.6 billion for energy saving upgrades for homes, businesses and social housing.

Minister for Climate Change and Energy Chris Bowen said when the Australian Energy Regulator (AER) provided government with a DMO forecast late last year, customers were facing price rises of between 40 and 50 percent.

"That's why the Government acted in December to cap coal and gas prices and why we worked with states and territories to deliver up to $3 billion in direct relief for the most vulnerable households and small businesses.

"In the longer term, we are getting more renewables in the grid through Rewiring the Nation and the Capacity Investment Scheme because the cheapest form of energy is firmed renewable energy - and this will take pressure off bills and help shield Australians from volatile international energy prices.

"In contrast, Peter Dutton and his No-alition voted against every dollar of bill relief and said they would undo the Government's intervention, ripping hundreds of dollars out of households and small businesses.

Treasurer Jim Chalmers said the final Default Market Offer would lock in much lower prices for Australian consumers than were forecast last year before the Government intervened.

"This data confirms our intervention in the market along with our rebates for families and small businesses are doing exactly what we intended - taking the sting out of price rises," he said.

"It's clear that our energy intervention has been successful in easing power price rises.

"The Coalition hid power price rises from Australians during the election, they voted against energy relief in the Parliament and last week revealed they would wind back our intervention in the market if given the chance, costing Australians hundreds of dollars on their energy bills.

"The Opposition should explain to Australians why they think families and small businesses should pay more for their power."

The Default Market Offer and associated factsheet can be found at https://www.aer.gov.au/news-release/aer-releases-final-determination-fo….

Residential DMO

Small Business DMO

Estimated average household energy bills for Default Market Offer regions

* After intervention and rebates estimates reflect average price outcomes for households eligible for bill relief, which includes pensioners, Commonwealth Seniors Health Card holders, Family Tax Benefit A and B recipients, and recipients of electricity concessions under existing state and territory schemes.

The table above comprises Treasury and DCCEEW analysis and estimated retail standing offer price impacts of the Energy Price Package.

Bills are standing offers for the average household, drawing upon draft default offers where available and using weighted averages across regions where applicable. The Treasury and DCCEEW price estimates for 2023-24 prior to the intervention were estimated utilising Australian Energy Regulator (AER) estimates of the 2023-24 Default Market Offer (DMO), which drew from wholesale modelling commissioned by DCCEEW. After intervention estimates reflect average energy bill estimates after the announcement of the AER's Final Default Market Offer. Note that the regional Queensland final determination is expected to be published by 9 June by the Queensland Competition Authority, remains draft only.