Australian households and small businesses are anticipated to see a decrease in energy bills starting July, with potential savings of up to $266 and $487 respectively.

The Australian Energy Regulator has introduced draft price caps for power bills, known as the default market offer, to regulate the maximum price that retailers can charge.

In New South Wales, proposed changes reflect a 3% price reduction in some areas and a 0.9% increase in regional areas.

Victorian households and small businesses are expected to experience price drops of 6.4% and 7%, respectively.

In south-east Queensland, household energy prices are set to rise by 2.7%, while small business rates are projected to decrease by 0.3%.

The regulator's draft ruling aims to address past spikes in wholesale power prices and strike a balance between reducing high prices and maintaining fair retailer margins.

Federal Climate Change and Energy Minister Chris Bowen recognizes the trend towards lower prices but signals the need for ongoing efforts to further reduce energy costs for Australians.