Energy tariffs explained

As of May 2018, there were nearly 400 different energy tariffs available to domestic customers! Many consumers mistakenly believe that all suppliers and tariffs are the same and the only difference between any two is cost. However, there are a number of different tariff types which offer different features and benefits. Some of the most common are listed below.

Standard tariffs

This is your supplier’s ‘default’ tariff. It will have variable prices that can go up and down with the market. Standard tariffs will not have an exit fee and you will not have a contract end date. The contract will simply keep on rolling until you leave. While these tariffs do offer the flexibility of coming and going as you choose, they are in most instances significantly more expensive than fixed contracts and prices can rise significantly without notice.

Online energy tariffs

Online energy tariffs require you to manage your account via the internet, usually in return for a discount to your gas or electricity. You will be asked to send meter readings online and will receive ‘paperless’ bills.

Usually this means your bills will be sent as attachments to emails or will be available to download from your personal account area on the supplier’s website.

If you opt for an online tariff, many suppliers will send all important correspondence via email rather than through the post. This includes your welcome pack when you sign up. If you prefer paper bills, an online tariff may not be for you.

Pre-Payment Tariffs

These tariffs are for people with prepayment meters and enable customers to pay in advance for gas and electricity by ‘topping-up’ their meter using prepay tokens, cards or a key. Historically, these tariffs have been among the most expensive. However, the introduction of a “price cap” has seen the prices fall significantly, and many prepayment tariffs are now cheaper than their credit alternatives.

You can switch suppliers to a new prepayment tariff if you have up to £500 of debt on your meter, although some smaller suppliers may have lower debt limits.

If you want to pay by any other method, your supplier may charge you for installing a new meter, and may refuse to allow you to leave prepayment if you are in debt.

Fixed energy tariffs

This is a tariff which offers guaranteed standing charges and unit rates, usually until a defined end date.
Most, though not all, fixed tariffs will have an exit fee if you leave before your contract end date. Under Ofgem rules, if you switch 42-49 days before the end of your tariff your supplier cannot charge exit fees. Many suppliers now offer fixed prices which are much cheaper than their Standard variable tariffs. The price you pay for your energy will be protected from price increases during the term of the contract. However, if you increase the amount of energy you use, the amount you pay will go up; fixed tariffs only guarantee the cost of the standing charge and the pence per kilowatt hour cost of gas or electricity.

Dual fuel tariffs

A dual fuel energy tariff provides gas and electricity from the same energy supplier. Not only can dealing with just one energy company make life easier, but often cheaper plans are only open to dual fuel customers. The amount of discount dual fuel offers does not always outweigh the potential savings of going with two separate suppliers for gas and electricity.

'Green' energy tariffs

A ‘green’ tariff can be one of two things. Either the supplier will promise to match your usage with generation from renewable sources of energy, or it will contribute towards environmental schemes on your behalf. Many, but not all, green tariffs charge higher than average prices.

Domestic and Business customers


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