Every year, energy regulators announce how much the default electricity price will rise or fall. Here’s what actually goes into your power bill, how those prices are set, and how to make sure you’re not paying too much.
Your electricity bill pays for much more than the power itself. It covers the cost of generating electricity, transporting it across the country, and the retailer that sends you the bill.
What makes up a bill
Wholesale costs are what retailers pay for electricity from generators, such as coal, gas, wind and solar plants. They can swing sharply with fuel prices, weather and outages at power stations.
Network costs pay for the poles, wires and substations that carry electricity from power stations to homes. They’re often the biggest single part of a bill, and they’re regulated because networks are monopolies.
Environmental costs cover schemes that support renewable energy and energy efficiency.
Retail costs cover billing, customer service and the retailer’s profit margin.
The default market offer
Because many households were on expensive plans without realising it, the Federal Government introduced the default market offer in 2019.
It’s set each year by the Australian Energy Regulator and acts as a maximum price for standard, or “standing offer”, electricity plans in New South Wales, south-east Queensland and South Australia. Victoria has its own version, the Victorian default offer, set by the state’s Essential Services Commission.
It also acts as a reference price. Retailers must show how their plans compare with it, so customers can compare offers more easily.
The default market offer is set in May and applies from 1 July. For 2026-27, it fell for most households in New South Wales and south-east Queensland, but rose slightly in South Australia. The regulator said lower wholesale costs and more wind and battery power in the evening peak helped bring prices down.
Why prices change
Bills rose sharply in 2022 and 2023, when Russia’s invasion of Ukraine pushed up global coal and gas prices, and outages at Australian coal power stations reduced supply.
Over the longer term, prices are influenced by the cost of building new transmission lines, the closure of coal power stations, the growth of cheaper renewable energy and batteries, and how much gas costs.
Governments have also provided energy bill relief rebates in recent years, which reduced bills without changing the underlying prices.
Getting a better deal
The Government’s Energy Made Easy website, and Victoria’s Victorian Energy Compare, let households compare plans based on their actual usage.
Households with smart meters may save by using more power when it’s cheapest, such as the middle of the day when solar is plentiful. From July 2026, retailers in some states must offer a “Solar Sharer” plan with free electricity for three hours in the middle of the day.
People struggling to pay can ask their retailer for a hardship program, which retailers are required to offer.
