The regulators set 'Default Offer' prices intended to put a cap on what retailers can charge, plus set a benchmark that plans and discounts can be comapred to
From 1 July 2019, new regulation replaced the old Standing Offers with Default Offers across most of the National Energy Network. There are two kinds of Default Offer: The Default Market Offer (DMO) is set by the AER for Residential and SME single and single + controlled load tariffs in NSW, SA and South East QLD. In Victoria, the Essential Services Commission sets the Victorian Default Offer (VDO) for single rate and controlled load tariffs in Victoria only.
DMO rates are expressed as a single dollar value for a set annual consumption level, rather than as a price per day plus a price per unit of usage.
In Victoria, VDO rates are expressed as a price per day plus a price per unit of usage. Retailers are free to market and sell Market Offers, but they must make the VDO price available for those who want it.
Both DMO and VDO set a cap on the price that a customer will pay when they have not entered into a Market Offer with their retailer. They also set the benchmark against which any discounts offered in Market Offers must be expressed.
Bill Hero results include a calculation of how each plan compares to the relevant DMO for your state.
Victorian DMO comparison calculations
In Victoria, the DMO is specified as a price per kWH and a daily supply rate, which is analogous to how single rate plans are priced.
For single rate and single rate + controlled load tariffs, Bill Hero includes a calculation of how each plan compares, in terms of % higher or % lower, to the DMO price calculated for the same usage a time period for your bill.
NEM DMO comparison calculations
Outside Victoria, the DMO is specified as a single price for a set annual kWh consumption level. Bill Hero calculates the % above or % below DMO by separately calculating what each plan would have cost at the reference kWh consumption level for 1 year duration.
See https://www.aer.gov.au/retail-markets/retail-guidelines-reviews/retail-electricity-prices-review-determination-of-default-market-offer-prices for more information on the DMO.
See https://www.energy.vic.gov.au/victoriandefaultoffer for more information on the VDO.