Many households and businesses in Australia’s east could see their power bills fall, while others will see rises below the inflation rate, according to the energy regulator.

The Australian Energy Regulator on Tuesday released its draft Default Market Offer (DMO), known as DMO 6, for energy prices in 2024/25.

The default market offer, which will apply to consumers in NSW, South Australia and parts of Queensland, is a price cap on how much retailers can charge customers on their default plans.

“At this time, it is estimated that price changes for all residential and small business customers on standard retail plans will be less than the rate of inflation,” the regulator said.

The majority of residential customers could see price reductions of between 0.4 per cent to 7.1 per cent, it said.

The remaining residential customers may see increases between 0.9 per cent and 2.7 per cent, depending on their region and whether they have controlled load. 

Most small business customers could see reductions between 0.3 per cent and 9.7 per cent while others could face modest increases of around 0.7 per cent, depending on their region.

“We know that economic conditions have put pressure on many Australians and the increases in electricity prices over the last two years has made energy less affordable for many households,” AER chair Clare Savage said in a statement.

“In light of this, the AER has, in this decision, placed increased weight on protecting consumers.”

Federal Energy Minister Chris Bowen said the draft default market offer, or benchmark price, was “encouraging”.

“Small businesses (are) getting the biggest reductions, which is welcome,” he told Nine’s Today show.

“We’ve got a long way to go though … nobody’s suggesting that this is over or the cost-of-living pressures don’t continue to exist as they do around the world.”

Ms Savage said the draft determination would allow a retailer to recover costs and make a reasonable profit with a retail margin of six per cent for residential plans and 11 per cent for small business plans.

“These are higher margins than we see in other markets, such as Victoria, where strong competition remains,” she said.

Victoria’s Essential Services Commission is also expected to release its offer on Tuesday.

The Australian Energy Regulator also said wholesale electricity prices had stabilised since their extreme peaks in 2022.

But that had been offset somewhat by increased network costs.

Ms Savage also pointed to reductions in the prices of retailers’ more competitive market offers, which are below the default offer.

“The median market offer has dropped by between one per cent and five per cent across most electricity distribution zones since 31 December 2023,” she said.

“The most competitive market offers are now 18 per cent to 23 per cent below the DMO price.”

Energy retailers are required to tell customers on the front page of their bills, at least every 100 days, if they can offer a better deal.

The regulator’s final offer determination will be delivered in May, pending public consultations, and will come into effect from July.

This post was originally published on Michael West.