Energy tariffs explained
There are lots of different energy tariffs for consumers to choose from, but the amount of choice doesn't need to be daunting. We explain the types of energy tariffs available on the market, so you can focus on getting the best deal for you.
Fixed price energy tariffs
Fixed price energy tariffs (also referred to as fixed rate plans) are a type of gas and electricity tariff that provide a set rate per kilowatt hour for a fixed duration — this is usually 12 months, but can be as long as three years. As the rate per kilowatt hour is set for the length of the contract, you would be protected from price rises on one of these tariffs. However, if the price of energy fell, you wouldn't benefit from a cut.
It's worth noting that this type of tariff does not protect you from your direct debit amount increasing or decreasing (your direct debit amount is determined by your usage), but it does fix the rate you pay per unit of gas or electricity. Fixed tariffs are usually the cheapest type of tariff available on the market, and make up the majority of competitive deals to be had from switching energy.
Standard variable tariffs (SVTs)
Standard variable tariffs (SVTs) act as an energy supplier's default tariff, and are usually the most expensive types of tariff on the market.
When you roll off of a fixed price energy tariff, you could end up paying hundreds of pounds more if you don't switch again; this is because you may get placed onto your supplier's SVT. Alternatively, if you've just moved home, this will be the type of tariff you start on with the property's current supplier.
As SVTs are variable, it means the unit rates of your gas and electricity can go up and down as your energy supplier dictates — though you'll have to have notice of this happening. They are the type of energy tariff that are affected by price rises.
Prepayment energy tariffs
Most energy suppliers have at least one prepayment tariff available to switch to. Prepayment meters require a user to pay for their energy before they use it. This differs to a credit meter where you are invoiced for the amount you have used after you've used it.
To top up a prepayment meter you need to take the corresponding token, key, or smartcard that can be taken to a newsagents and topped up. Alternatively and increasingly, a supplier will allow you to make top-ups online via a website or app.
Your supplier may have requested you move to a prepayment meter due to debt on your account, or you may have inherited one at a property you rent or bought. If and when the debt on your account is settled with an energy supplier, they may be able to change your prepayment meter to a credit meter.
Prepayment tariffs are capped by Ofgem, so tariffs cannot charge more than a specified unit rate. The cap amount is calculated and updated once every six months. However, prepayment rates in general remain more costly than fixed energy deals.
Dual fuel tariff
Many suppliers offer the same tariff to switch both your gas and electricity to, so you wouldn't have to switch each fuel separately, and both your fuels are with the same supplier.
For ease, many consumers choose a dual fuel tariff option, as it is convenient to only deal with one energy supplier. This also means there is only one point of contact for any issues with your usage, meters, and billing.
Some suppliers offer a discount for having both your fuels with them so it can work out cheaper to be on a dual fuel tariff, however, in some cases it can also be cheaper to have each fuel with a different supplier, depending on the deals available to you.
Though not a common type of energy tariff, tracker tariffs are offered by some suppliers.
Tracker tariffs directly follow a price index, for example wholesale costs. They can go up and down and are updated as often as daily. This makes it difficult to know whether or not they will work out cheaper for your home. It's still likely that a fixed deal would be a cheaper option so always run an energy comparison.
Economy 7 tariff
Economy 7 is a type of electricity meter and subsequent tariff, which has a different prices per kWh for two times of the day (usually day and night). The price/kWh is often cheaper at night, when it's presumed there will generally be less usage from other homes.
If you're not sure whether you have an economy 7 meter, then one easy way to find out is by looking on your bill. You will be shown two different rates for electricity and the Meter Point Access Number (MPAN) and your bill will start with '02' if you have Economy 7.
You may inherit an economy 7 meter when you purchase a property, but it may not suit your needs if you can't get the most out of the night time's cheaper usage. In this case, you can talk to your current supplier and arrange for a credit meter to be installed (this may cost a fee).
When running a comparison with an economy 7 meter, it is important that you select this type of meter for your results as this will change what is available to you. It's also useful to know what proportion of energy you use at different rates, as this will make for a more accurate comparison.
Economy 10 tariff
These tariffs are similar to economy 7 in the sense that they depend on the time of usage. However, many suppliers do not support economy 10, or may not offer tariffs to new customers.
Capped energy tariffs
Capped tariffs come with a promise that the price won't go up but may go down. Some larger suppliers have offered a number of tariffs offering a capped price. Any price reduction is often tied to the supplier's SVT and not to the raw wholesale price (as is common with tracker tariffs). Capped tariffs are rarely the cheapest in the market, but it's always best to run a comparison to check.
Plans that are labelled as green often promise at least 100% renewably sourced electricity. However, some provide much more including 10% renewably sourced gas. With green tariffs, the supplier buys the same amount of electricity and gas that you use; your energy usage adds to the demand for renewably sourced energy. Green tariffs are now some of the cheapest in the market, following a drop in the cost of producing renewable energy.
Once you know what type of meter you have, switching to the ideal tariff for you with ApTap couldn't be easier. Simply enter your energy information from a recent bill along with your meter type and generate bespoke comparison results for your household.