On your energy bill, you will have seen something called an energy tariff listed, but what exactly does that mean and which tariffs are available?

What is an Energy Tariff?

An energy tariff is a plan for how much you’ll pay for your gas or electricity. It’s split into two charges:

💡 The unit rate which sets out how much you’ll pay per unit of electricity and gas you use.

💡 A daily fee called a standing charge, which is a set amount you pay per day for having electricity and gas, no matter how much or little energy you use.

The Two Main Tariffs

Fixed Tariff

A fixed tariff charges you the same unit rate for your gas or electricity and your standing charge, until your contract ends.

These contracts usually last 12 months but can be longer.
If you wish to exit early from your contract, you may have to pay a fee. But you can exit early for free if you are within the last 49 days of your fixed tariff contract.

This tariff is useful if you like to budget, as you know the unit rate for gas and electricity stays the same throughout. Although you will pay different amounts each month depending on how much energy you use. However, being on a fixed tariff also means that, because you are in a contract, you could be paying a higher or lower amount for energy versus energy prices at any specific time.

As prices of energy usually rise in the winter months, particularly in January, it may be worth moving onto a fixed tariff before that time of year in some cases to avoid any price rises then.

Money Saving Expert has a useful guide explaining whether it might be worth moving to a fixed rate tariff, if you are not already on one.

Standard Variable Tariff (SVT)

With a standard variable tariff, the unit rates and standing charges are capped under the Energy Price Cap, which usually changes every 3 months (January, April, July and October).

In other words, if the market price of gas or electricity goes up, so will the rate you pay for the energy you use. This usually changes in line with the Energy Price Cap change, which is every 3 months as mentioned above.

Variable is the supplier’s default tariff and is the most common one in England, so you will be put onto this one by default  if you don’t sign up to a fixed tariff or contract.

💡 You will also be put onto a standard variable tariff if you move supplier or your fixed tariff contract comes to an end, and you don’t renew it.

💡 Your supplier will always contact you with details of changes, as the tariff goes up or down.

💡 There are no exit fees if you wish to move off variable, so you are effectively able to switch to a different supplier or fixed tariff whenever you like.

💡 The standard variable tariff is usually the most expensive option, and most of the time you are overpaying for your energy, but there are circumstances when it can be cheaper – it all depends on the price of energy at the time.

💡 Due to its variable nature, this type of tariff is potentially harder to budget for.

Other Tariffs

Even though the fixed tariff and standard variable tariff are the most common tariffs, there are some others which could be of interest.

Most of these additional tariffs also fall under being either a type of fixed or standard variable tariff.

Dual Fuel Tariff

💡 These tariffs are available only if you have both gas and electricity in the house and you must be willing to have the same supplier for both.

💡 It is usually cheaper to deal with one supplier, and sometimes, suppliers may offer deals if you have both your gas and electric with them.

💡 It’s quite convenient to have a dual fuel tariff, and they can be either fixed or variable, it’s completely up to you.

Prepayment Energy Tariffs

💡 This tariff allows you to pay for energy before you use it.

💡 You top up your meter using a key, card or an app and you buy credit for this by going to a local shop or online.

💡 This tariff is only for people who have a prepayment meter.

💡 Prepayment meters are great for budgeting as you are the one that tops up your meter. This means you are in more control of how much you spend on energy.

Low/No Standing Charge Tariffs

💡 These are tariffs which offer a heavily reduced or no standing charge fee per day.

💡 However, usually higher unit rates of energy will come alongside those lower per day costs for these tariffs.

💡 They are therefore only beneficial to households that use little energy.

💡 This type of tariff is likely to become more common, with the energy regulator Ofgem proposing that every supplier in the UK should offer at least one low, or no standing charge tariff.

Time of Use Tariffs

💡 Time of use tariffs effectively reward you for shifting your energy use to off-peak hours by providing a cheaper rate of electricity at certain time of day.

💡 There are similar tariffs linked to the time of use tariff, including the economy 7 and economy 10 tariff.

💡 Peak and off-peak rates can vary massively by supplier, so make sure you’re getting the best rates.

💡 One thing to be wary off is that these tariffs are best for households with an electric heating and hot water system – storage heaters or a heat pump.

💡 They also require a smart meter in the property.

What is the Best Tariff for Me?

Choosing the best tariff for you really depends on your personal situation, your budget, the meter you have, and what’s most important for you! There are a few examples list below of why someone may choose a certain tariff:

💡 If you prefer budgeting or like to budget your money, being on a fixed tariff gives you the best idea of what you are paying each month.

💡 If you have gas and electricity in the home, switching onto one supplier and being on a dual fuel tariff may be beneficial.

💡 If you are on a pre-payment meter for example, you may only have access to a pre-payment tariff

How to Switch Energy Tariff

As mentioned earlier, you can find your current tariff listed on your energy bill.

If you are thinking about switching, how do you go about it?

💡 Find the best tariff for you based on your personal circumstances and make use of comparison websites that look at the best deals for you. Examples of this include Cheap Energy Club from Money Saving Expert.

💡 Once you have found the tariff you prefer, you can switch by calling the supplier you want to switch to or signing up online and your supplier should handle everything from there.

💡 It can take around 20 working days for the switch to happen.

💡 Always remember you have a 14 day cooling off period – meaning 14 days from the day you agree a new contract/tariff with a supplier to reverse your decision without receiving any penalty charges.

💡 Always remember that when switching to a fixed tariff, check if there are any exit fees if you need to leave the contract early.

💡 An additional thing to remember is that you can switch tariff even if you are in debt to your supplier, but this is not the case if you have been in debt for longer than 28 days, or if you are on a prepayment meter and you owe your supplier more than £500.

Here at Selce, we support individuals in finding the best tariff for them and then helping them make the switch over. If this is something you are interested in, please contact our energy advice team on 020 4566 5764 or energy.advice@selce.org.uk.

Alternatively, find us in person at one of our energy cafes as detailed here on our energy advice page.