What the reference price is
The Default Market Offer, or DMO, is a regulated maximum price set each year by the Australian Energy Regulator for customers on standing offers in NSW, south-east Queensland and South Australia. Victoria has its own equivalent, the Victorian Default Offer or VDO, set by the state’s Essential Services Commission. Both do the same two jobs.
First, they protect people who never shop around by capping what a retailer can charge on a standing offer. Second — and this is the part most people miss — they create a common "reference price" that retailers must advertise their market offers against, so different plans can be compared on a single yardstick.
Why "X% below reference price" matters
Before the reference price existed, retailers advertised huge "discounts" off their own inflated made-up rates, which meant nothing — 40% off an invented high price could still be dearer than a plainly priced plan. The reference price fixed the base of the comparison so a discount is measured against a regulated, independent number instead of the retailer’s own inflated figure.
So a plan advertised as "12% below the reference price" is telling you it is 12% cheaper than the regulated benchmark at a set usage level, in your network zone. That is genuinely more meaningful than the old discounts, and it lets you rank offers quickly.
Where the benchmark falls short
The reference price is built on a benchmark household using a fixed amount of electricity in a given network zone, with no solar. If your usage, your usage pattern or your solar export differs from that benchmark — and almost everyone’s does — the advertised percentage will not translate into the same percentage on your actual bill.
The percentage also compares a plan against the regulator’s cap, not against the best plan on the market. Two plans can both be "below the reference price" while one is meaningfully cheaper than the other for you. And a plan with a great headline percentage but punishing peak rates or a high supply charge can still lose to a plainer plan once your real usage is applied.
How to actually use it
- Treat the reference-price percentage as a first-pass filter, not a verdict — it quickly tells you which plans are in the right ballpark.
- Check the plan is being compared for your own network zone; a percentage quoted for a different zone does not apply to you.
- Look past the percentage to the underlying rates: the usage charge, the daily supply charge, any time-of-use periods and the feed-in tariff if you have solar.
- Cost the shortlisted plans against your real usage — from your own bill or meter data — rather than the benchmark household.
- Let a whole-of-market tool do the arithmetic across every retailer, so the ranking reflects your actual annual dollars, not a marketing percentage.