Five ways to cut your energy bills this winter

Electricity prices are set to begin falling in a matter of weeks for many households and small businesses across the country.

On Tuesday, the Australian Energy Regulator (AER) released its final Default Market Offer (DMO) for the 2026-27 financial year.

This is a price cap that limits how much electricity retailers can charge on certain contracts for residential and small business customers in New South Wales, South Australia and South East Queensland.

How much are electricity prices set to fall?

From July 1, households on flat rate DMO offers will see electricity prices fall between 3.4% and 5% in New South Wales and 7.2% in South East Queensland. They are set to rise by 1.4% in South Australia though.

For customers on time of use DMO plans, prices will decrease by between 3.7% and 7.7% in New South Wales, 10.7% in South East Queensland and 1.1% in South Australia.

"This is a positive outcome with prices coming down for the majority of households and all small businesses across the three regions where the DMO safety net applies," says Clare Savage, AER chair.

While not covered by the DMO, many Victorians will also get some energy bill relief from July 1 after the release of the 2026-27 Victorian Default Offer by the Essential Services Commission.

Victorian households are expected to see electricity prices fall by 5% on average (the equivalent of $84 a year), while small businesses will see average falls of 6% (the equivalent of $241 a year).

What's helping drive down electricity costs?

Households will have become used to power price volatility in recent years, with costs rising and falling - though generally trending higher. So why are electricity prices set to fall from July?

Reduced costs for retailers and a change in the methodology used to determine the latest DMO played a part.

But the single biggest contributor, according to the AER, were lower wholesale costs. These typically make up 30-41% of the DMO prices.

"The reductions compared to last year reflect easing costs across most components of the DMO," Savage explains.

"Particularly in wholesale energy, where we've seen lower electricity contract prices, reduced spot price volatility and increased output from wind and battery generation during evening peaks."

How can households cut their energy bills?

Even with electricity price cuts coming down the pipeline for large parts of the country, households have been urged to do more to reduce their energy costs further.

Sophie Ryan, comparison expert at iSelect, says that consumers looking to reduce their bills - especially those on DMO offers - should strongly consider reviewing their existing plan.

"Market offers are often well below the default rate, and switching can be far simpler than most people expect," she says.

"Have your latest bill handy and use a free comparison service. It takes minutes and could save you hundreds."

Ryan says that there are also a few practical steps that people can take around the house.

"Switch off unused lights and swap to LEDs - that alone can slash your lighting energy usage by up to 75%.

"Electronics still draw power when plugged in, even when they're turned off - so flicking off the switch at the wall can make a real difference.

"Even just switching your gaming console off after use could save more than $150 a year."

Heat your house for less this winter

With temperatures dropping and winter just days away, households in cooler climates are likely to be bracing for an energy bill bump ahead.

A 2021 analysis by the Australian Energy Council found that electricity bills in the ACT, New South Wales, South Australia and Victoria were roughly 20% to 30% higher in winter than in summer.

In contrast, gas bills across the same regions were two to three times higher in winter, with the difference even greater in colder states like Tasmania and Victoria.

So, what can people do to stay warm during the winter months without running up excessively large bills? Ryan has five tips to consider.

1. Adjust your thermostat

"Heating is one of the biggest drivers of winter electricity bills, so it's worth being strategic about it.

"Use your heating efficiently. Set your thermostat between 18 and 20 degrees - every extra degree can add around 10% to your heating costs."

2. Heat the room, not the house

"It sounds simple, but a lot of households keep their homes warmer than they need to without realising. So, avoid heating rooms you're not using.

"Close doors to unused spaces and use a smaller heater for the room you are in rather than running ducted heating throughout the whole home."

3. Get drought-proofing

"Door snakes, draught stoppers and heavy curtains all help hold in heat and reduce how hard your heating system needs to work.

"And the good thing is that these don't cost the world, but they can make a significant difference."

4. Book in a service

"A poorly maintained heating system works harder and costs more to run. A quick annual service can improve efficiency and pick up any issues before they become expensive problems.

"Check your hot water system too. Hot water is often overlooked but accounts for a chunk of household energy use."

5. Utilise the new Solar Sharer Offer

"For smart meter households, retailers will start offering a Solar Sharer Offer from July 1. This is an opt-in plan that gives you three hours of free electricity during the middle of the day.

"If you can shift some of your usage into that window, it could significantly reduce your bills without any upfront cost. You do not even need rooftop solar to take advantage of it."

Want to find out if you're one of the millions of Aussies who could get free electricity? Check out our guide on the Solar Sharer Offer for more details.

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