How to reduce your electricity bill: a practical guide for 2026
Pay less per kilowatt-hour and use less on the appliances that matter. Here's how, with 2026–27 default prices and real running costs.
Key points
- 2026–27 default offers fell in most of NSW, south-east Queensland and Victoria from 1 July 2026; SA rose 1.4%.
- Compare plans on Energy Made Easy or Victorian Energy Compare using your own bill.
- Heating and cooling are about 40% of household energy use.
- A new Solar Sharer offer gives three free hours a day in NSW, south-east Queensland and SA.
- Each degree on the thermostat changes heating or cooling use by around 5% to 10%.
Electricity is one of the few household bills you can usually cut without going without. Most savings come from two places: paying a lower price per kilowatt-hour, and using less power on the few appliances that use the most. Here's where to start.
1. Know what a fair price looks like
In NSW, south-east Queensland and South Australia, the Australian Energy Regulator sets a Default Market Offer (DMO), and in Victoria the Essential Services Commission sets the Victorian Default Offer (VDO). These are maximum prices for standing offers and a reference point that every retailer must compare its plans against. For 2026–27, from 1 July 2026:
| Region | Annual reference price, 2026–27 | Change |
|---|---|---|
| Ausgrid (Sydney, Central Coast, Hunter) | $1,899 | −3.4% |
| Endeavour (Western Sydney, Illawarra) | $2,328 | −3.4% |
| Essential Energy (regional NSW) | $2,604 | −5.0% |
| Energex (south-east Queensland) | $1,988 | −7.2% |
| SA Power Networks (South Australia) | $2,334 | +1.4% |
| Victoria (VDO, 4,000 kWh a year) | $1,591 | −5% |
Flat-rate residential prices for a typical household in each region. Your bill depends on how much you use.
If you've never switched plans, you may be on a standing offer at or near the default price. Market offers are often cheaper.
2. Compare plans on the government sites
- Energy Made Easy (energymadeeasy.gov.au) is the free, independent comparison service run by the AER for NSW, Queensland, South Australia, Tasmania and the ACT.
- Victorian Energy Compare (compare.energy.vic.gov.au) does the same for Victoria.
Upload or enter details from a recent bill so the comparison uses your actual usage. Look at the estimated annual cost, not just the discount: a big percentage off a high rate can still cost more. Check the supply charge, any solar feed-in tariff, and whether the cheapest price relies on paying on time or by direct debit. In WA and the NT, most households have a single regulated retailer, so focus on using less.
Your bill must also tell you whether your retailer has a better plan for you. If it does, ask to be moved.
3. Pick the right tariff
- Flat rate: the same price all day. Simple and often best if you can't shift usage.
- Time of use: cheaper off-peak, more expensive in the evening peak. Good if you can run the dishwasher, washing machine or EV charging overnight or in the middle of the day.
- Solar Sharer: a new opt-in offer from 1 July 2026 in NSW, south-east Queensland and South Australia, with three hours of free power each day (11am–2pm in NSW and Queensland, 12pm–3pm in SA, up to 24 kWh a day). It suits households that can shift a lot of use to the middle of the day.
- Controlled load: a cheaper separate rate for an electric hot water system, if your home has one.
4. Target the big users
Heating and cooling make up roughly 40% of household energy use and hot water about a quarter. Here's what common appliances cost to run a year at our default rates of 29c per kWh (Victoria) and 34c (NSW):
| Appliance and use | Victoria (29c) | NSW (34c) |
|---|---|---|
| Panel or fan heater, 2,400 W, 3 hrs a day for 4 months | $254 | $298 |
| Reverse-cycle air conditioner (small room), ~800 W, 6 hrs a day for 6 months | $254 | $298 |
| Vented clothes dryer, 2,400 W, 1 hr, 4 times a week | $145 | $170 |
| Heat pump clothes dryer, ~900 W, 1.5 hrs, 4 times a week | $82 | $96 |
| Pool pump, 1,100 W, 6 hrs a day for 6 months | $350 | $410 |
| Fridge, about 1 kWh a day | $102 | $119 |
A portable heater is one of the most expensive ways to heat a room: about $254 over a Victorian winter in our example, compared with about $254 for a small reverse-cycle air conditioner running twice as many hours for longer. A heat pump dryer costs about $82 a year against $145 for a vented dryer used the same way.
5. Quick wins that cost little or nothing
- Set the thermostat sensibly: 18–20°C for heating in winter and 25–27°C for cooling in summer. Each extra degree adds roughly 5% to 10% to heating or cooling energy use.
- Use fans before the air conditioner. They cost around 2 cents an hour to run.
- Seal draughts around doors and windows; gaps can account for a large share of heating and cooling losses.
- Close doors and curtains so you only heat or cool the rooms you use.
- Check your hot water temperature. Storage systems should be set to 60°C; instantaneous systems no higher than 50°C.
- Wash in cold water and dry clothes on a line when you can.
- Switch to LEDs, which use around 80% less energy than older bulbs.
- Turn appliances off at the wall when not in use, especially second fridges, game consoles and old TVs.
6. Bigger changes that pay back over time
- Solar panels cut daytime costs. The payback depends on how much power you use while the sun's up. Try our solar payback calculator.
- Replacing an old electric or gas hot water system with a heat pump can cut hot water energy use substantially. State rebates may help.
- Reverse-cycle air conditioning is usually the cheapest way to heat a home with electricity.
- Check for concessions. Pensioners, concession card holders and people with medical cooling or heating needs can often get state energy concessions. Ask your retailer or state government.
Work out what your appliances cost
Frequently asked questions
What is the Default Market Offer?
A maximum price for standing offer electricity plans in NSW, south-east Queensland and South Australia, set each year by the Australian Energy Regulator. Victoria has its own Victorian Default Offer.
How do I compare electricity plans?
Use Energy Made Easy (NSW, Queensland, SA, Tasmania and the ACT) or Victorian Energy Compare in Victoria. Enter details from a recent bill and compare the estimated annual cost.
What uses the most electricity at home?
Heating and cooling (around 40% of household energy use) and hot water (around a quarter), followed by appliances such as dryers, pool pumps and fridges.
Sources
- AER: Default Market Offer 2026–27 information kit
- Essential Services Commission: Victorian Default Offer 2026–27
- Energy Made Easy (AER)
- Victorian Energy Compare
- energy.gov.au: quick wins to save energy
More guides
Last reviewed October 2026. This guide is general information only. It isn't financial, tax, credit or legal advice and doesn't consider your circumstances. Rules change, so check the official sources below or speak to a licensed professional before you make a decision.