Default Market Offer (DMO)
The Default Market Offer (DMO) is a method used to cap the prices that energy providers can charge for standing offer contracts. There is a different DMO for most tariff types in each distribution zone for specified usage amounts applying to residential and small business customers.
For example, the Default Market Offer might specify that a representative energy customer in a particular location, on a single rate tariff who annually uses 4000kWh must not pay more than $1500 in 12 months on a standing offer contract.
The Default Market Offer (DMO) was introduced by the Australian Energy Regulator (AER) to act as a price cap on electricity providers’ standing offer contracts. Providers are required to set their standing offer prices so a representative energy customer’s total annual spend is no more than the DMO.
What are the benefits of the Default Market Offer?
The Default Market Offer (DMO) as set by the Australian Energy Regulator (AER) has many benefits for customers:
- Acts as a cap on standing offer contracts, based on a fair price as set by a Federal Government body.
- Sets a baseline price point to easily compare energy plans across providers.
- It is reviewed and updated annually.
Frequently asked questions
The reference price is the DMO total bill amount for a year, for a representative energy customer with a given average usage, tariff type and location. The reference price is used by energy providers when comparing the prices of market offers, and any time a provider advertises a plan they must show the estimated annual bill amount for a representative energy customer.
Standing offer contracts are default, government regulated energy contracts. When a provider does not know what contract a customer wants to be on, they will be placed on a standing offer contract.
For example, when moving to a new house where electricity is already connected, you will be placed on a standing offer contract until you confirm which energy plan you choose. This is to help ensure that your energy supply is not switched off even if energy requests haven’t been actioned.
The DMO applies in New South Wales, South Australia and South East Queensland. Victoria has an equivalent Victorian Default Offer known as the VDO.
The DMO is relevant for these electricity customers:
- Single rate tariffs (with or without solar)
- Controlled load (with or without solar)
- Time of use tariffs (with or without solar)
The DMO doesn’t apply to:
- Embedded network customers
- Tariffs that include demand charges
- Small business customers with time of use or controlled load
- Customers on market offer plans
- Gas only customers
Market offers will usually have lower rates than standing offers and may include other offers and incentives. Check out our Telstra Energy Electricity market offer. Energy providers set the terms and conditions for any market offers whereas the standing offer terms and conditions are set by the government.
An average or representative customer is a hypothetical customer who consumes a particular amount of electricity within a particular area. As the reference price is based on this hypothetical customer, the reference price can differ between regions as energy usage and distribution costs also differ.
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