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Tariff Options

There are a number of tariff options that suppliers can offer. The main types of offerings in the market include:

  • Standard – variable single rate with a standing charge
  • Time of Use (e.g. Economy 7, White Meter)
  • Prepayment
  • Fixed term (of a finite duration)
  • ‘Green’

Suppliers can offer cash discounts to customers for:

  • Dual fuel – where there is a discount for taking both fuels from one supplier
  • Online account – where a discount is given for managing the energy account online and receiving bills electronically.


Standard Variable Tariff

Standard variable tariffs (SVT) do not have a fixed duration and are open-ended.

Because they are open ended, the price of a standard variable tariff can go up or down.

This can mean that they are more expensive than some fixed term products. Suppliers are not allowed to include an exit fee, so consumers are free to leave a standard variable tariff at any point in time without paying a cancellation charge.

Standard variable tariffs are offered as single fuel tariffs or dual fuel, with the supplier typically giving a discount for taking two fuels together.

Potential benefits:

  • No exit or cancellation fees
  • Benefit from any price reductions


Potential drawbacks:

  • Can be more expensive
  • Prices can increase


Time of Use (e.g. Economy 7or White Meter in Scotland) Tariff 

With Economy 7 the consumer receives seven hours of electricity at an off-peak or low rate. Any electricity consumed after that is at the higher on-peak day time or normal rate. The timings vary between different areas, but the off-peak period will be a seven hour period falling somewhere between the hours of 10pm and 8.30am. The specific hours may vary depending on the region, the type of meter and could even change at different times of the year – for example, with a mechanical time-switch; the night rate may start at 12am during the winter and spring GMT hours and change to 1am during summer and autumn BST hours.

Economy 10 (sometimes referred to as ‘Heatwise’) offers additional three hours of electricity at the off-peak rate. The timings could be, early morning (4.30am – 7.30am), early afternoon (1.30pm – 4.30pm) and overnight (8.30pm – 12.30am). Economy 10 is not supported by all energy companies so consumers’ choices may be more limited.

Potential benefits:

  • ï‚· May be better for households using electric storage heaters or heating water using an electric immersion heater – it is estimated that the consumer ought to use approximately 55% of their electricity at night for it to be cost effective (this figure does vary depending on to the supplier)


Potential drawbacks:

  • ï‚· Can be expensive if the consumer does not use enough electricity during the off-peak period to make it cost effective
  • ï‚· Some consumers may have a legacy Economy 7 meter despite a change in heating arrangements (i.e. a new gas boiler instead of an electric storage heater) so it may be worth checking to see if this is still an appropriate meter – most can be run as a “standard” meter


Prepayment Tariff

For use with a prepayment meter. According to Ofgem (June 2015) there remain fewer tariff choices for those paying by prepayment compared to direct debit. The majority of suppliers offer standard variable type tariffs to prepayment users. There are a small number of fixed rate tariffs available. A few suppliers are offering smart prepayment meter tariffs and a small number of tailored social tariffs for customers in vulnerable circumstances.

Potential drawbacks:

  • ï‚· Can be more expensive than paying by direct debit
  • ï‚· Limited number to choose from


Fixed Term Tariff

With a fixed term tariff, the consumer will be in a contract with their supplier for a defined period of time. Some suppliers may also fix prices at one level for the duration of the tariff. Typically, fixed term tariffs have a termination fee if the consumer leaves the contract early. To avoid customers unwittingly being rolled onto a more expensive contract at the end of a fixed term tariff, Ofgem’s rules make suppliers put the consumer onto their cheapest standard tariff (evergreen tariff) if the consumer does not choose a new tariff. If the consumer does not want this to happen, they can contact their supplier before the fixed term tariff comes to an end and choose something else, or move to another supplier. If the consumer is happy being put onto the cheapest evergreen tariff but would like to choose something else later on, they can move without being charged an exit fee.

Consumers on a fixed term tariff will be given 42-49 days before their contract ends to decide if they want to stay with their supplier or switch. They will get details of the tariff they will be moved onto if they stay with the same supplier and do not agree to a different one.

Such tariffs come in three main types:

  1. Where the prices are fixed at a certain level for the entire length of the contract (e.g. the unit rate will be ‘x’ for the full one year of the tariff).
  2. Where a supplier tells the consumer at the start of the tariff what the prices will be throughout the contract (e.g. the unit rate will be ‘x’ for the first 6 months, and ‘y’ for the 6 months after that).
  3. Where the prices are linked to an index that the supplier has no control over (e.g. the unit rate will start at ‘x’ and follow the movements of the FTSE 100 after that).

For these types of tariff, everything has to be set out by the supplier at the start of the contract, so the consumer knows that fixed means fixed.

Potential benefits:

  • ï‚· Certainty on price – because under Ofgem’s new rules suppliers cannot change the price, the consumer will have certainty on the costs of their tariff
  • ï‚· Some fixed term have fixed prices – paying the same unit rate means the consumer can plan ahead

Potential drawbacks:

  • ï‚· Cost – depending on the tariff, some fixed rate tariffs can be more expensive than the supplier’s standard tariff; this is particularly the case with a fixed price tariff
  • ï‚· Price cuts – for fixed price tariffs, if prices fall the consumer continues to pay the set rate
  • ï‚· Exit/ cancellation fees


Green Tariff

A number of suppliers offer ‘green’ energy tariffs, but what is offered can vary.

Potential benefits:

  • ï‚· Consumers are able to choose certified tariffs that help the environment
  • ï‚· Consumers can seek third party reassurance of green claims by choosing a certified scheme

Potential drawbacks:

  • ï‚· Can cost more



Dual fuel discount 

Most suppliers offer dual fuel discounts for taking both fuels from them. Under Ofgem’s Retail Market Review changes the amount of the dual fuel discount will be clearer. It will no longer be expressed as a percentage amount but as a £ per year figure.

Potential benefits:

  • ï‚· Usually cheaper getting both fuels from the same supplier
  • ï‚· More convenient for the consumer – receive bills from one company and there is only one point of contact for any queries, requests for help or complaints

Potential drawbacks:

  • ï‚· Some tariffs have dual fuel discounts that look appealing, but may not be cheaper than taking gas and electricity from separate suppliers


Online discount

With online tariffs the consumer will need to sign-up/ manage their account online and receive their bills electronically. The tariff name will usually refer to ‘online’ or ‘web’.

Potential benefits:

  • ï‚· May be more convenient to manage for the consumer
  • ï‚· The discount will reduce the cost of the tariff (but there may be cheaper non-online tariffs on the market)

Potential drawbacks:

  • ï‚· Only available to consumers with internet access


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