Wrapping your head around energy in Australia can feel like decoding a secret language—so many different terms and jargon flying around! With various organisations in the mix and plenty of factors at play, it’s easy to feel lost. But no worries—we’re here to cut through the confusion and make it all simple.
This blog is about breaking down the energy jargon and explaining the key terms you might encounter. Whether you’re new to the market or just looking to understand things better, we’ll guide you through the critical players, how energy prices are set, and what this means for you. 
Energy doesn’t have to be complicated, and we’re excited to show you how manageable it can be.

How Energy Prices Are Set in Australia

Energy prices in Australia might seem unpredictable, but there’s a system behind them. Different organisations help set guidelines to keep prices fair for households and businesses. Let’s break it down so you know what’s going on—and what it means for you.
The National Electricity Market (NEM)
The NEM system connects Australia’s eastern and southern states, allowing electricity to be bought and sold. Prices go up and down based on supply and demand—just like groceries at the supermarket.

Default Market Offer (DMO) and Victorian Default Offer (VDO)

These are safety nets to stop retailers from charging unfairly high prices and providing consumers with a reference point on prices.
DMO: Applies to customers in NSW, SA, and South-East QLD. It’s set by the Australian Energy Regulator (AER).
VDO: Same idea, but just for Victoria, set by the Essential Services Commission.
Why it matters: Retailers often promote discounts off the DMO or VDO, but the real question is—how does the final price compare? Looking at the actual rates can help you avoid misleading offers.

Differences in Energy Plans

Energy plans can be packed with special offers and discounts, but which save you money? You’re not alone if it all feels like a puzzle! Here’s what to watch out for:
Discounted Rates vs. Reference Price 
Some energy plans advertise discounts on the VDO or DMO. These offers apply to single-rate tariffs, pricing structures where you pay the same rate for electricity usage regardless of the time of day.
It can be ideal for those with simple energy needs, low usage, and a preference for straightforward pricing. However, comparing the actual rates is crucial to ensure the plan offers genuine savings.
"Free Hours" or "Bonus Time" Plans
Some retailers offer free electricity for a few hours, often during off-peak hours. Sounds great, right? But…
The rates may revert to standard pricing (not discounted rates) outside these hours.
If most of your electricity use is outside the free hours, this plan may not be as beneficial as it seems.
Every energy retailer offers different plans, so it’s worth taking a moment to consider your energy habits before choosing one. If unsure, a quick chat with your provider’s support team can help you find the best fit. Or call SUMO on 03 9102 8400—We’re always happy to help!

Understanding the Jargon in your Energy Plan

When checking an energy quotation, you’ll come across some technical terms—here’s what they mean:
Daily Supply Charge: A small daily fee to keep your home connected to electricity or gas, no matter how much you use.
Peak Usage: The rate you pay when electricity demand is highest (if you’re on a time-of-use plan).
Tariff Type: How your electricity is priced:
Single Rate: A flat rate per kWh, no matter when you use power.
Time-of-Use: Different rates depending on the time of day (e.g., peak, off-peak, shoulder periods).
Knowing these terms can help you pick the right plan and avoid surprises on your bill.

Understanding energy jargon is the first step to finding a plan that makes sense. Want to see if you’re on the best deal? 
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