Power prices on Australia’s east coast are predicted to fall from July because of increased output from wind generation and batteries, and falling electricity contract prices, with potential savings up to $1,320 for some small businesses.

In a draft decision on Thursday, the Australia Energy Regulator (AER) proposed a price reduction for customers on standing electricity plans – known as the “default market offer” – of between 1.3% to 10.1% for residential customers, and between 8.5% and 21.2% for small businesses, depending on the region.

If adopted, households in New South Wales and Queensland could save more than $200, while small businesses in NSW could save more than $1,300.

Clare Savage, chair of the AER, said the draft decision would be “welcome relief” for customers after several years of rising prices following Russia’s invasion of Ukraine. The regulator would be closely monitoring the global energy situation before making a final decision in May.

Every year, the AER sets a default market offer in NSW, South Australia and south-east Queensland, while Victoria’s Essential Services Commission does the same in that state. The offer is intended as a safety net for customers who haven’t sought a better deal from their electricity retailer, and acts as a reference price for comparing offers.

Savage said reduced wholesale prices were the “biggest driver” behind the draft decision for 2026-27. “We’ve had lots more renewables come into the market. We’ve had good wind, solar and battery performance.”

Victorian customers on standing offers could also expect a price fall, with the Essential Services Commission recommending lower prices in its draft determination released last week. If adopted, annual bills for Victorian customers would be $46 lower on average compared with 2025-26.

The draft determination also introduces the “solar sharer” offer, an opt-in plan that includes three hours of free power in the middle of the day to take advantage of abundant solar energy.

The energy minister, Chris Bowen, said the idea was designed to share the benefits of Australia’s solar success.

“For households that can shift some of their usage into the free power period, this can mean real savings on bills, whether that is running the dishwasher, doing the washing, or heating hot water during the day.”

Solar panels on the roof of an apartment block in Brunswick in Melbourne’s north. Photograph: James Ross/AAP

The free usage periods would be set between 11am to 2pm in NSW and south-east Queensland, and noon to 3pm in South Australia. According to the AER, the overall cost would be the same as the default offer, but with free energy in the middle of the day and slightly higher prices at other times.

More than 4.2m Australian households already have solar.

“But not everyone can have solar panels,” said Greg Bourne, a councillor with the Climate Council. “With solar sharer, they can actually gain some benefit in the middle of the day.”

The default offer was an important safety net for consumers, he said, because the energy market “was so unbelievably complex”.

“You almost need a PhD to work out whether you’re getting a good deal or not.”

About 8% of residential customers and 15% of small business customers were on the default offer, Savage said. She encouraged people to shop around, with some deals offering up to 23% below the default price.

The offer was a safety net, not the best price, according to the Australian Energy Council’s chief executive, Louisa Kinnear. “Rather than waiting for cheaper prices to flow through in July we encourage consumers to take the opportunity to save through a lower market offer today.”

Savage said the regulator remained cautious about global events, particularly in the Middle East. “It’s a very uncertain time.”

“While Australia continues to invest in new sources of renewable energy, our electricity system remains significantly exposed to the international price of fossil fuels such as coal and gas.”