Price Factors, Tariffs and 2026 Rules
\"X% less than the reference price\": how to read electricity offer comparisons
What the reference price percentage on Australian electricity offers means, how it is calculated against the DMO or VDO, and why your own usage can change the answer.
When an electricity offer in NSW, South East Queensland, South Australia or Victoria says it is "12% less than the reference price", it means that at a set annual usage for your area and tariff type, the plan's yearly cost is 12% below the official default price: the AER's Default Market Offer (DMO) or the ESC's Victorian Default Offer (VDO). It is a fair way to compare advertisements with each other, because every retailer must use the same benchmark. It is not a promise about your bill. If your usage is much higher or lower than the assumed figure, or if you use most of your power at different times, the real saving can be bigger, smaller or even negative. This guide shows how to read the statement and convert it to dollars.
Why reference prices exist
Before 2019, retailers advertised discounts off their own, often inflated, standing offer rates. A "30% discount" could still be more expensive than another retailer's undiscounted plan. The federal electricity retail code under the Competition and Consumer (Industry Code—Electricity Retail) Regulations 2019 changed this in the DMO regions: advertised offers must be compared with the DMO. Victoria introduced equivalent rules using the VDO.
The result is a single yardstick: the reference price for your distribution zone and tariff type.
What the statement tells you
| Element | Meaning | Where to find it |
|---|---|---|
| Percentage | Offer's annual cost vs reference price at reference usage | Ads, plan information, comparison sites |
| Reference price | The DMO (NSW, SE Qld, SA) or VDO (Vic) for your zone and tariff | AER or ESC decision |
| Reference usage | The annual kWh assumed for that zone and tariff | AER or ESC decision |
| Conditions | Whether a discount relies on paying on time, direct debit or similar | Plan's fact sheet |
Two rules worth knowing:
- An offer's unconditional price is what is compared. A retailer cannot present a conditional discount as a bigger reference saving than the plan actually delivers without meeting the condition.
- The comparison is for the same tariff type. A time-of-use offer is compared with the time-of-use reference price; a flat-rate offer with the flat-rate reference price.
Turning a percentage into dollars
Illustrative example only (made-up reference price):
- Reference price for your zone, flat rate: $2,000 a year
- Offer A: "10% less" → $2,000 × 0.90 = $1,800
- Offer B: "15% less" → $2,000 × 0.85 = $1,700
- Offer C: "3% more" → $2,000 × 1.03 = $2,060
At the reference usage, Offer B is $100 a year cheaper than Offer A. You can repeat this with the reference price checker.
When the percentage misleads you
The percentage is calculated at one usage level. Plans balance their supply charge and usage rate differently, which changes the ranking when your usage differs.
Illustrative example: the reference usage is 4,000 kWh.
| Plan | Supply charge | Usage rate | Annual at 4,000 kWh | Annual at 2,000 kWh | Annual at 7,000 kWh |
|---|---|---|---|---|---|
| Plan X | 80 c/day | 34 c/kWh | $292 + $1,360 = $1,652 | $292 + $680 = $972 | $292 + $2,380 = $2,672 |
| Plan Y | 140 c/day | 28 c/kWh | $511 + $1,120 = $1,631 | $511 + $560 = $1,071 | $511 + $1,960 = $2,471 |
At the reference usage the two plans are within about $20 of each other, so their percentages look almost identical. A small household using 2,000 kWh saves about $99 with Plan X; a large household using 7,000 kWh saves about $201 with Plan Y. The reference percentage alone would not show this.
Other reasons the headline can mislead:
- Time of use: a time-of-use offer priced well against the reference may still cost you more if most of your use falls in the peak window. See the time-of-use and demand tariff guide.
- Solar: the reference comparison ignores feed-in tariffs. A plan with a higher feed-in tariff may have higher usage rates. See solar feed-in tariffs in 2026.
- Benefit periods: if a discount ends after 12 months, the percentage after that date may be quite different. See common energy plan mistakes.
- Controlled load: households with a separate hot water circuit need the reference price that includes controlled load.
A simple routine
- Use the percentage to shortlist offers: anything priced above the reference price deserves a hard look.
- Run the shortlist through Energy Made Easy or Victorian Energy Compare with your own usage (NMI or smart meter download), following the step-by-step comparison.
- Read the plan's fact sheet for conditions, benefit end dates, exit fees and how prices can change.
- Check that the feed-in tariff, controlled load and any demand charges match your situation.
The DMO 2026–27 guide and the VDO 2026–27 guide explain where to find the reference price for your zone, and the pricing overview puts the reference price in context.
FAQ
Does a negative percentage mean the plan is cheaper?
Retailers phrase it as "less than" or "more than" the reference price. "Less than" means cheaper at the reference usage; "more than" means more expensive.
Is there a reference price for gas?
No. Gas offers do not carry a DMO or VDO comparison. Compare them by annual cost on the government comparison sites using your own usage.
Why does my bill not match the percentage?
Your usage, timing, solar exports, concessions and any price changes during the year all differ from the reference assumptions.
Do states outside the DMO and VDO regions use reference prices?
No. In regional Queensland, Tasmania, the ACT, Western Australia and the Northern Territory, other regulated price or comparison arrangements apply.
Sources
- Australian Energy Regulator — DMO reference prices by zone and tariff
- Essential Services Commission — VDO reference prices
- Australian Competition and Consumer Commission — electricity retail code guidance for advertising
- Federal Register of Legislation — Competition and Consumer (Industry Code—Electricity Retail) Regulations 2019
