Electricity prices to rise in 2025-26: What you need to know
The Australian Energy Regulator (AER) has released a draft determination for the Default Market Offer (DMO) for the 2025-26 period, proposing increases in electricity prices for residential and small business customers in New South Wales, South East Queensland, and South Australia.
Understanding the Default Market Offer (DMO)
The DMO serves as a safety net, setting a maximum price that energy retailers can charge customers on standard electricity plans, known as "standing offers." It also acts as a benchmark for comparing various market offers from different energy providers.
Proposed price increases across Australia
When discussing electricity price changes, the nominal percentage refers to the raw year-on-year increase in dollar terms. However, the real percentage adjusts for inflation, meaning it reflects the true increase in purchasing power.
For example, if electricity prices rise by 8% nominally, but inflation is 2.4%, the real increase is lower (around 5.6%) because part of the price rise is simply keeping up with inflation.
Real comparisons are based on RBA 2024-25 inflation forecast of 2.4% in its February 2025 Statement on Monetary Policy . The draft determination suggests the following increases:
Residential and small business customers on the DMO
| State/Region | Network | Residential (Nominal) | Residential (Real) | Small Business (Nominal) | Small Business (Real) |
|---|---|---|---|---|---|
| New South Wales (NSW) | Ausgrid | +8.8% | +6.4% | +8.2% | +5.8% |
| Endeavour Energy | +7.8% | +5.4% | +7.7% | +5.3% | |
| Essential Energy | +8.0% | +5.6% | +7.8% | +5.4% | |
| South East Queensland | Energex | +5.8% | +3.4% | +4.2% | +1.8% |
| South Australia | SA Power Networks | +5.1% | +2.7% | +6.6% | +4.2% |
Reasons for the increase
Several factors have contributed to these proposed price hikes:
- Wholesale costs: The cost of generating electricity has risen, due to recent coal outages.
- Network costs: Expenses for maintaining and upgrading the infrastructure that delivers electricity to homes and businesses are up, influenced by higher wages and material costs.
Impact on consumers and next steps
These proposed increases could further strain households and small businesses already dealing with cost-of-living pressures. The AER says it acknowledges these challenges and emphasises the importance of balancing the need for energy companies to recover costs while ensuring electricity remains affordable for consumers.
The final DMO prices for 2025–26 will be determined by, and take effect from, 1 July 2025.
What can you do about electricity price rises?
To mitigate the impact of these potential increases, consumers are encouraged to:
- Review your energy plan: Regularly check for better rates or flexible plans.
- Switch providers or plans: Find a provider with more competitive pricing.
- Invest in energy efficiency: Use energy-efficient strategies, appliances and insulation.
- Consider solar energy: Installing solar panels may reduce grid reliance.
- Monitor energy usage: Track usage with smart meters or apps to cut down on waste.
- Explore government assistance: Check for rebates or subsidies to help with costs.
Savings are a sensible solution to soaring prices
To prepare for rising electricity prices, one of the most effective strategies is to start saving now. By setting aside a portion of your income each month, you can create a buffer that can help cushion the impact of future price hikes. Small contributions to a dedicated savings account can add up over time, offering preparedness and peace of mind for any unexpected increases.
By staying informed and proactive, you can navigate upcoming changes in electricity prices.
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