Millions of Australian households sit on standing offer electricity contracts without realising they are paying the maximum regulated rate. The difference between a standing offer and a competitive market offer can exceed $500 per year for a typical household. Here is what the terms mean and how to switch.
A standing offer (also called a default offer) is the regulated fallback electricity contract. If you have never actively chosen an electricity plan, or if your previous market contract expired and you did not act, you are likely on a standing offer.
The Australian Energy Regulator (AER) sets the maximum price for standing offers each financial year. This price is called the Default Market Offer (DMO) in most states, and the Victorian Default Offer (VDO) in Victoria. These caps are set at a level intended to protect disengaged consumers from exploitation, not to give them the cheapest available rate. They represent a price ceiling, not the market floor.
Being on a standing offer does not mean you are paying an illegal or unfair price. It means you are paying the maximum allowed under regulation, which in most cases is substantially above what the market offers.
A market offer is a contract negotiated between you and your retailer, or between you and a competing retailer. Retailers compete for customers by offering rates below the standing offer price. Market offers can be structured as:
Fixed-rate contracts: A set rate per kilowatt-hour (kWh) for a defined period, typically 12 to 24 months, with exit fees if you leave early.
Variable-rate contracts: A rate that can change, typically with notice, but which starts below the standing offer.
Conditional discount contracts: A rate that includes a percentage discount off usage or supply charges, conditional on paying on time or paying by direct debit.
The AER publishes an annual report comparing standing offer prices against market offer prices by distribution zone. In most mainland states, the best available market offer for a typical residential customer is 10% to 25% cheaper than the Default Market Offer standing rate.
For context, the AER's DMO price for a typical household in South East Queensland in 2024-25 is approximately $1,971 per year based on average consumption. The cheapest market offers available in that zone were around $1,450 to $1,600 per year, a saving of $370 to $520 per year for identical consumption.
In Victoria, the VDO sets the standing offer. The AER's data shows median household savings from switching to a competitive market offer in Victoria range from $250 to $450 per year.
Your electricity bill must state whether you are on a standing offer or a market offer. This is a regulatory requirement under the National Energy Retail Law. Look at the top section of your bill for the words "Standing Offer" or "Default Offer". If you see either, you are paying the regulated maximum.
Your bill also shows your retailer name and the supply charge and usage charge rates you pay. These are the numbers you need to compare.
The Australian Government runs the Energy Made Easy comparison website at energymadeeasy.gov.au. It covers New South Wales, Queensland, South Australia, the ACT, and Tasmania. Victoria has a separate comparator at Victorian Energy Compare (compare.energy.vic.gov.au).
To use either tool, you need your annual electricity consumption in kilowatt-hours, which appears on your bill, and your distribution zone (also on your bill). The tool returns a ranked list of market offers and calculates estimated annual cost for your consumption level.
Switching takes around 10 minutes online. There is no interruption to your supply. The new retailer handles the transfer process. If you switch to a variable-rate market offer, you can switch again at any time without penalty. Fixed-rate contracts typically have exit fees of $50 to $100 if you leave before the contract end date.
If you have solar panels, the feed-in tariff rate your retailer pays for exported electricity varies significantly between market offers. Some market offers combine a competitive usage rate with a higher feed-in tariff. Comparing these requires calculating both the import and export value for your consumption pattern, which the Energy Made Easy tool handles if you enter your export amount.
Find out if you're on a standing offer and compare market rates for your area.
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