The Public Interest Advocacy Centre (PIAC) says today’s Default Market Offer (DMO) 2024–25 Draft Determination signals a welcome shift by the Australian Energy Regulator (AER).
The DMO has been used to set a benchmark price for electricity across most of Australia since 2019. Previous DMO decisions have included a ‘competition allowance’ that set the DMO higher than the cost of providing energy to consumers with a reasonable profit. By removing the competition allowance in this decision, the regulator is rightly prioritising affordability for households.
Quotes can be attributed to Douglas McCloskey, Director of Energy and Water Justice at PIAC:
‘This decision recognises that protecting households needs to be front and centre for the regulator when setting the default market offer.’
‘This is a welcome change in approach from the Australian Energy Regulator. For too long, the interests of retailers have come ahead of the needs of household consumers.’
‘The draft decision still allows for retailers to make a ‘fair profit’, but crucially removes an extra ‘competition allowance’ that was allowed under past DMOs, which gave added fat to retailers.’
‘Intentionally allowing retailers to charge people more than a fair price has never made sense. Households assume the DMO price to be the fair cost of providing an essential service, but for years it’s been higher than can be justified.’
‘The DMO plays an important role as a reference price for all market offers. If it isn’t set fairly it impacts all consumers who rely on it as a benchmark for what’s fair to pay. This draft decision gets us closer to a DMO that does what household consumers expect it to do.’
‘While this announcement is generally good news for households, people living in regional NSW will still see their costs increase. As the AER moves to finalise this draft determination, it must ensure regional consumers are paying no more than necessary. Governments should also be doing all they can to ensure increasing costs of energy networks are shared more fairly.’
Media contact: PIAC Media and Communications Manager, Dan Buhagiar: 0478 739 280