They say power corrupts, but if you’ve opened a recent electricity bill, you might reckon it’s your energy company doing the corrupting. One of the most common questions Aussies ask—especially as the cost of living keeps climbing—is: what’s the maximum an energy provider can actually charge me? Turns out, there’s a clear answer… and a few sneaky grey areas worth knowing.

Can an energy company charge whatever they want?

Short answer: No, they can’t. Electricity prices in Australia are regulated—or at least, heavily scrutinised. But depending on where you live, how you’re billed, and who your provider is, there’s still wiggle room for how much they can charge.

There are two key factors in play:

• Default Market Offers (DMO) and Victorian Default Offers (VDO) act as price caps.

• Competitive offers (also called market offers) can go lower—or sometimes higher—depending on your usage and discounts.

For most households, the DMO or VDO acts as a kind of “safety net,” set annually by the Australian Energy Regulator (AER) or Victoria’s Essential Services Commission (ESC). These offers cap how much a retailer can charge customers who don’t—or can’t—choose their own plan.

So, if you’ve never switched providers, or you’re on a standing offer, you’re protected. But if you’re on a market offer, the pricing isn’t capped in the same way.

How much is too much? The numbers behind the limits

Let’s get specific. As of July 2024:

• In NSW, the Default Market Offer is around $1,960 annually for a typical household.

• In Victoria, the Victorian Default Offer sits at roughly $1,640 per year.

• In South-East QLD, the DMO is about $1,840 annually.

• In South Australia, expect closer to $2,250.

These figures are based on a reference household using 4,000 kWh a year. If you use more or live in a regional area, your DMO might be higher.

Retailers can’t charge more than this for standing offers. For market offers, it’s a bit like airline tickets—prices can vary wildly, and it’s your job to shop smart.

What causes energy prices to spike?

So why do bills blow out sometimes, even if you haven’t cranked the air con?

Here’s a quick list of what drives price hikes:

• Wholesale energy prices: The cost retailers pay for electricity on the spot market. Think supply and demand—if generators are down, prices jump.

• Network costs: The price of delivering electricity via poles and wires, which varies by region.

• Environmental charges: Like the Renewable Energy Target.

• Retailer margins: Because yes, they’re running a business too.

In other words, your provider doesn’t set prices out of thin air—but they can structure plans and discounts that either help or hurt your bottom line.

Are there rules protecting consumers?

Yes—and they’ve gotten stronger in recent years.

The Australian Energy Regulator enforces what’s called the “Better Bills Guideline”, requiring retailers to:

• Show clear comparisons to the reference price

• Provide understandable language in bills

• Explain usage charges and discounts transparently

Plus, from 2023, retailers must notify you if you’re no longer on their best available deal. That’s big. It means if you’re overpaying, your provider has to tell you.

Still, plenty of people stay on expensive plans without knowing it. Why? Because comparing plans is tedious—and frankly, a bit confusing. Which brings us to…

How can I make sure I’m not overpaying?

If you’re in a deregulated state (like NSW, QLD, SA or Victoria), the easiest way to keep bills low is by switching plans regularly. Just like with phone plans or insurance, loyalty rarely pays.

Here’s what savvy bill-cutters usually do:

• Check the Energy Made Easy (or Victorian Energy Compare) government comparison sites

• Use your actual usage data—not just estimated bills—to compare plans

• Set calendar reminders every 12 months to review your plan

• Avoid lock-in contracts or hefty exit fees

Many households also use electricity brokers or comparison platforms to cut through the fine print and find better deals. Some are independent, others earn commissions from retailers. Either way, they can save you hours—and potentially hundreds.

Are there dodgy tactics to watch out for?

Absolutely. While most retailers play by the rules, there are still a few old tricks doing the rounds:

• Conditional discounts: e.g. “Save 25%—but only if you pay on time, every time.”

• Low usage rates but high daily supply charges: Watch out for this if you’re in a small household.

• Complex time-of-use tariffs: These can be great, or a disaster, depending on when you use power.

One clever way retailers skirt price scrutiny is by offering so-called “unconditional discounts”—but inflating the base rates. In practice, you’re not saving at all.

What if I live in a regional or remote area?

Here’s where things get trickier.

In remote regions, prices are often subsidised through state or federal schemes. But choices are slim, and competition is low. In some parts of WA and NT, for instance, energy markets are still regulated and run by government-owned entities.

Even within deregulated states, regional residents often face higher network costs and fewer plan options. So while price caps still apply for standing offers, the market won’t always deliver the same savings as it does in metro areas.

FAQ

Can my energy company disconnect me without warning?
No. They must follow a formal process and give proper notice. Disconnections for non-payment can’t happen on weekends or public holidays.

What’s the difference between fixed and variable rates?
Fixed-rate plans lock in your usage rate (not your total bill) for a set time. Variable rates can change, often in response to wholesale prices.

Can I negotiate my energy rate?
Yes—particularly if you’re a small business or large user. Residential customers might not get far with negotiations, but it’s always worth asking.

Energy companies can’t just charge whatever they like—but that doesn’t mean you’re automatically on the best deal. Between standing offers, market fluctuations, and tricky plan structures, the real cost of electricity can vary more than most realise. That’s why many households turn to electricity brokers to cut through the noise and find plans that genuinely suit their usage. And in a market this charged, a little guidance can go a long way.

For a deeper dive into how pricing works at the regulatory level, the Australian Energy Regulator offers helpful, plain-language explanations and price factsheets.