DMO prices will increase in New South Wales, what it’ll mean for energy customers
On Thursday, the Australian Energy Regulator (AER) announced its final determination for default market offer (DMO) prices for the 20/21 financial year and the news may come as a surprise for many households.
The AER’s paper revealed that from July 1 2020, final determination DMO prices in New South Wales will now sit $9 lower or $3 higher, depending on the distribution zone.
What is the DMO?
The DMO is a price cap that was imposed by the AER in July last year to stop retailers from charging excessively high prices on their standing offers, as well as clear up the confusion around comparing energy plans. Customers who were previously on standing offers were then rolled onto the DMO.
Customers in South-East Queensland and South Australia will both experience a drop by $62 and $109, respectively.
Draft DMO prices for July 1 2020
|Distribution Zone||New DMO price|
|Ausgrid (3,900 kWh annual usage)||$1,462|
|Endeavour (4,900 kWh annual usage)||$1,711|
|Essential (4,600 kWh annual usage)||$1,960|
|Energex (4,600 kWh annual usage)||$1,508|
|SAPN (4,000 kWh annual usage)||$1,832|
Source: AER Final Determination Default Market Offer Prices 2020-21
According to the regulatory body, the changes in DMO prices across are based on forecasted wholesale costs, environmental costs, network and residual costs.
For instance, wholesale costs are expected to increase in NSW due to the projected increase of small generation units (SGU), like household solar PV systems.
On the other hand, environmental costs are expected to fall across all regions, thanks to the expansion in renewable investments.
How the DMO shaped the energy market in 2019
In September last year, Mozo reported on the figures released by the Australian Competition and Consumer Commission (ACCC) about how the DMO impacted the market.
The data revealed that just two months on from its launch, the DMO brought on annual savings for standing offers of between $130 to $430.
“We are pleased about the positive changes in the electricity market so far, including a recent announcement of free energy advice tools for small businesses, but urge that other key recommendations be implemented if costs are to come down further,” ACCC Chair, Rod Sims said at the time.
Customers should take an active role in finding a better deal
With the news that DMO prices are to increase in July, customers who are on the DMO are encouraged to search for a better deal.
“If you are on the DMO, now might be the time to start shopping around for other offers. There are a range of different retailers in the market who may be able to provide you with a more competitive offer,” said Mozo’s energy expert, Nathan Warne.
So if you’re ready to find out how much your household could be saving every year, get started by entering your postcode below!