Almost every cost in your business went up this year. Here is the one that went down.
From 1 July 2026, small business customers received the largest Default Market Offer reduction of any customer class — up to 14%. NSW and South East Queensland standing-offer bills fell by up to 7.2%. South Australia was the exception, rising 1.4%.
Most small businesses will not see any of it, because of how the DMO actually works.
What the Default Market Offer is — and is not
The Default Market Offer is a price cap set by the Australian Energy Regulator. It is the maximum a retailer may charge a customer on a standing offer contract.
Three consequences that matter:
It is a ceiling, not a price. A DMO reduction lowers the worst legal price. It does not lower what you pay if you are on a market offer.
It only applies to standing offers. If you have ever actively signed an energy contract, you are almost certainly on a market offer and the DMO change does not touch you.
Standing offers are usually the most expensive product available. They are the default you land on by doing nothing — after a contract expires, after moving premises, or after never having shopped at all.
So the DMO cut is genuinely good news for businesses on standing offers, and irrelevant to everyone else. Either way, it is a reason to check.
The gap that actually matters
The difference between a standing offer and a competitive market offer is consistently larger than the DMO movement.
A business that has never switched can typically find 10–25% by moving to a competitive market offer — several times the size of this year’s DMO reduction.
Which means the headline is the hook, not the opportunity. The opportunity is that most Australian small businesses have never properly tested their energy contract.
What to actually compare
Comparing the headline rate is how businesses switch to a worse deal while believing they have won. There are five components.
Usage rate (c/kWh) — the number everyone compares. It is not the only one, and it is often not the biggest.
Daily supply charge — a fixed daily amount regardless of consumption. For a low-usage business this can exceed the usage charge entirely. A plan with a great rate and a high supply charge is a bad plan for a small office.
Demand charges — applied to many small business tariffs based on your highest consumption interval in a period. If you have one heavy-load moment a month, this can dominate your bill. It rarely appears in comparison headlines.
Time-of-use structure — peak, shoulder and off-peak windows vary between retailers. A plan that suits a business running 9-to-5 may be poor for one running early mornings or weekends.
Contract terms — discount expiry dates, benefit periods, exit fees and how the rate behaves when the benefit period ends. Many “discounts” revert to standing-offer pricing after twelve months, which is precisely how businesses end up back where they started.
The switch, properly
1. Find your bill. You need your NMI (National Meter Identifier), annual consumption in kWh, current tariff type and current rates.
2. Get your actual consumption profile, not an estimate. Your retailer must provide twelve months of interval data on request. Any comparison built on a guess is a guess.
3. Compare like for like across all five components above. Use the government comparison service as a baseline, then approach retailers or a broker directly — larger consumers can frequently do better than published rates.
4. Check the exit position on your current contract before signing anything.
5. Diarise the expiry date. The single most common failure is switching to a good deal, then rolling onto standing-offer pricing when the benefit period ends. Set a reminder for eleven months.
Where this sits
Energy is a real cost — up roughly 26% since March 2020 — but it is now the one moving in your favour, and it is rarely the largest line in a small business.
Wages carry roughly half the weighting of the small business cost index. Insurance rose 51.7% over the same period, interest 36.3%.
So treat this as lever six in our Profit Lever Hierarchy — moderate impact, very low effort. Worth an hour, not worth a week.
The encouraging part is that Australian businesses are already good at this: 58% of SME owners shop for utility discounts at least annually, and one in five every six months or more. It is the one systematic cost behaviour in the market.
The frustrating part is that the same instinct almost never extends to software subscriptions, insurance renewals or supplier contracts — where the money is frequently larger and the competition for your business is just as real.
Where to go next
- Switching Business Utilities Properly — the detailed process
- The SaaS Audit — the same instinct, applied where nobody applies it
- Why Your Business Insurance Premium Went Up 60%
- How to Cut Business Costs in Australia
- The Profit Lever Hierarchy
Sources: Australian Energy Regulator Default Market Offer determination, effective 1 July 2026; energy.gov.au; AMP Bank GO Small Business Cost Pressure Index 2026; CommBank SME research. DMO applies in NSW, SE QLD and SA; Victoria operates the separate Victorian Default Offer. Figures current as at August 2026.