What is the Default Market Offer?

The Default Market Offer, or DMO, is a regulated safety-net electricity price set every year by the Australian Energy Regulator. It applies only in New South Wales, South East Queensland and South Australia, and it does two jobs at once: it's the rate a retailer must charge you if you're out of contract, and it's the reference price every market offer gets measured against.

What is the Victorian Default Offer and how is it different from the DMO?

The Victorian Default Offer, or VDO, is Victoria's own version of the same idea, a regulated safety-net rate for small business. It's set by the Essential Services Commission, not the AER, on a completely separate schedule, so it's a genuinely different scheme rather than another name for the same number. The two don't move together and don't update on the same date.

Am I automatically on the Default Market Offer or Victorian Default Offer?

Not unless you're out of contract. Most businesses sit on a negotiated market offer with their retailer, and the DMO or VDO only becomes the rate you actually pay if your contract lapsed and you rolled onto the default. It's still worth knowing your number, because it's the benchmark every retailer's advertised discount gets calculated against.

Which states use the DMO and which use the VDO?

The DMO applies in New South Wales, South East Queensland and South Australia, set by the AER. Victoria runs the VDO instead, set by the Essential Services Commission. Western Australia, the Northern Territory, Tasmania, the ACT and regional Queensland outside the Energex network aren't covered by either, those areas set their own pricing separately.

Is the Default Market Offer or Victorian Default Offer a good deal?

Generally no, it's designed as a safety-net ceiling, not a competitive price. Most businesses that actually shop the market and switch onto a negotiated offer land well under the DMO or VDO, so if your current rate is sitting close to it, that's usually a sign you've rolled onto a default rate rather than a genuine market deal.

What's changing with the DMO and VDO for 2026-27?

Both are falling this year, but by different amounts because they're separate schemes. DMO small-business prices are dropping roughly 6.8 to 12.1% in South Australia, 10.4 to 14.0% in South East Queensland and 9.0 to 20.9% in NSW depending on tariff type, while Victoria's VDO is dropping a flatter, roughly 6% on average for small business. Treat these as ballpark ranges since your exact figure depends on your specific tariff.

Default Market Offer explained

I’m Joe from Smarta Switch in Brisbane. Every few weeks someone asks me a version of the same question: “I keep seeing ‘Default Market Offer’ mentioned, am I on it, and is that good or bad?” Usually they’ve spotted the term on a bill or a comparison site and nobody’s actually explained what it means.

This isn’t the guide I wrote on Energy Made Easy, the free government comparison tool. That one’s about the tool you use to shop for a plan. This one’s about the number the tool, and every retailer in the country, measures itself against: the actual regulated reference price, what it’s called depending on where you are, what’s changing for 2026-27, and why it’s almost never the rate you should end up paying.

We’re paid by the energy retailer when you switch, never by you.

What the Default Market Offer actually is

The Default Market Offer, DMO for short, is a regulated “safety net” electricity price set once a year by the Australian Energy Regulator (AER). It applies in exactly three places: New South Wales, South East Queensland and South Australia. If your business sits outside those three areas, the DMO isn’t the benchmark governing you, more on that below.

The DMO does two jobs at once. First, it’s the rate a retailer is allowed to charge you if you’re out of contract or never chose a plan, so you can’t be left on some arbitrary, sky-high number just for doing nothing. Second, it’s the reference price every retailer’s “market offer” gets measured against. When a retailer advertises a discount, that discount is calculated off the DMO for your network area and tariff type. No DMO, no honest way to check whether “20% off” actually means anything.

Victoria plays by different rules: the VDO

Victoria doesn’t use the DMO at all. It runs its own version called the Victorian Default Offer (VDO), same basic idea, a regulated safety-net price for small business, but set by a different body under different rules: the Essential Services Commission (ESC), not the AER.

That matters more than it sounds. The DMO and VDO are not the same scheme wearing two names. They’re two separate regulatory regimes that happen to do a similar job. They don’t move together, and they don’t update on the same schedule. A big drop in the DMO this year tells you nothing about what’s happening to the VDO, and vice versa.

Which safety net applies to you

Here’s the state-by-state version, so you can place your own business in about ten seconds:

New South Wales: DMO, set by the AER.
South East Queensland (the Energex network area): DMO, set by the AER.
South Australia: DMO, set by the AER.
Victoria: VDO, set by the ESC, not the DMO.
Regional Queensland (the Ergon Energy network area): neither. It was never moved onto the DMO, the Queensland Government sets its own price for that area instead.
Western Australia, the Northern Territory, Tasmania, the ACT: neither the DMO nor the VDO applies. Each runs its own separate regulated or standing-offer arrangement outside this framework entirely.

If you’ve got sites in more than one of these categories, and a lot of the multi-site businesses I quote do, you’re effectively tracking two, sometimes three, completely different benchmarks at once. Worth knowing which one applies to which site before you compare anything.

The 2026-27 numbers, and what’s actually changing

Both benchmarks are moving down this year, but by different amounts, because they’re separate schemes on separate clocks.

South Australia: DMO small-business prices falling roughly 6.8 to 12.1%, depending on tariff type.
South East Queensland: DMO small-business prices falling roughly 10.4 to 14.0%, depending on tariff type.
New South Wales: DMO small-business prices falling roughly 9.0 to 20.9%, the widest spread of the three, depending on tariff type.
Victoria: the VDO update for 2026-27 is a flatter, roughly 6% average reduction for small business.

The ranges exist because your actual number depends on your specific tariff, flat rate, time-of-use, demand, single-rate, and so on, not just your postcode. Treat these as the ballpark, not your personal number. The only way to get your actual figure is to check the published table for your network area and tariff, or ask someone to do it for you.

Here’s the bit most owners get wrong

The DMO and VDO are not a deal. They’re closer to a ceiling than a floor, a regulated backstop that exists so nobody gets gouged for being inattentive, not a price designed to be competitive. Most businesses that actually shop the market and land on a genuine negotiated offer sit well under it, sometimes a long way under it.

That’s also exactly why the number matters. I’ve written before about the “anchoring trick” in renewal letters, where a retailer offers you “20% off our reference rate” and it sounds generous. In a DMO state, that reference rate is usually this exact number. So if the DMO in South East Queensland just dropped 10 to 14%, and your renewal letter is still boasting the same old discount percentage off the same old reference point, do the maths before you sign. A flat discount off a number that’s fallen can still land you above where the market’s actually sitting today. For the fuller checklist on weighing any quote, not just against this benchmark, see how to compare business electricity quotes.

The DMO and VDO aren’t the rate to aim for. They’re the rate to check you’re nowhere near.

How to actually use the number

Work out which benchmark, if any, applies to each site. Use the state list above. Multi-site operators, do this per site, not once for the whole portfolio.
Find your actual figure. The AER publishes the DMO tables by network area and tariff, and the ESC does the same for the VDO. Comparison tools show it against your postcode too.
Use it as a floor test, not a target. If your current rate is sitting close to, or above, the relevant number, that’s a strong sign you’ve rolled onto a default rate rather than a real market offer. If you’re comfortably under it, that’s a much better sign.
Recheck it every year. Both benchmarks reset annually. A rate that looked sharp against last year’s DMO can look ordinary against this year’s, since the goalposts just moved.

What to do this week

Find out which of these applies to you. NSW, SEQ or SA means the DMO. Victoria means the VDO. Anywhere else, it’s neither, and you’re working off your own state’s arrangement instead.
Pull your last bill and check your per-kWh rate against the relevant number for your tariff type. Sitting close to it or above it is a flag worth acting on.
If you’re not sure, or you don’t love what you’re seeing, send it over. Upload your bill on this page or email hello@smartaswitch.com.au and I’ll tell you exactly where your rate sits against this year’s benchmark, and whether a real market offer would beat it. No cost, no catch, that’s simply how the arrangement works for you.

Two schemes, two regulators, two different clocks, and neither of them is the number you should be aiming for. Once you know which one applies to you, everything else on the bill gets a lot easier to judge.

Joe Lawrence, Co-founder, Smarta Switch Australia 0435 642 592 · joe@smartaswitch.com.au

Default Market Offer and Victorian Default Offer: the government safety-net rate explained