There are many different types of tariff and choosing the right one could help you to save money. It is important when you are considering switching supplier or tariff that you understand what the different types of tariffs you may be offered are.
Here is a brief guide to the most common types of energy tariff:
Standard tariffs
A standard tariff is the supplier’s basic tariff and is not usually discounted. You will normally receive quarterly paper bills which can be paid by cash, cheque, credit card or standing order. Unlike fixed energy tariffs, which sometimes come with exit fees, if you want to switch from a standard tariff you won’t be faced with a penalty.
Online tariffs
Online tariffs are available to you if you can switch supplier online, receive your energy bills by email and give meter readings online. These tariffs are normally the cheapest tariffs, allowing you to save up to £200 per annum. If you are on an online tariff you pay by either direct debit or cash/cheque. If you sign up to an online tariff you will need regular access to a computer so that you can check your energy bills and provide meter readings.
Fixed price tariffs
A fixed price tariff offers a guarantee that the price you pay per kWh for electricity or gas will not change for a set period of time. Fixed rate tariffs sometimes have a financial penalty if you try and leave before the end of the fixed period. You should also be aware that it is the unit price of gas or electricity that is fixed, not your bill and that will still change depending upon how much energy you use.
Capped price tariffs
A capped price tariff offers the guarantee that the price paid per kWh for electricity or gas, will not rise beyond the ‘cap’ for a set period of time. The price paid for electricity or gas could decrease if a company’s standard prices decrease during the period. Your bill will still vary depending on how much fuel is used.
Dual fuel tariffs
Most suppliers can now offer consumers both gas and electricity. If you choose to have your gas and electrify supplied by the same company you will often be offered a dual fuel tariff. Dual fuel tariffs tend to offer you a cheaper deal than you would get if you paid for gas and electricity separately.
Multi rate electricity tariffs
These tariffs involve having a multi rate meter fitted that can measure your usage at different times of the day. The main tariffs are:
Economy 7 – This is the most common type of multi rate meter, you will be charged a lower price for seven hours electricity through the night but a higher price at all other times. This tariff is best suited to consumers who use a lot of electricity at night – for example those with electric storage heaters. Economy 7 Meters produce two meter readings, one for the lower price night time consumption, and one for the higher price day consumption. Both meter readings are needed for a bill to be produced.
Economy 10 – This tariff also uses a multi rate meter and provides 10 hours of cheaper electricity each day split approximately into the following periods:
- Three hours in the morning (typically 4:30am to 7:30am)
- Three hours in the afternoon (typically 1:30pm to 4:30pm)
- Four hours during the evening (typically 8:30pm to 12:30am)
All appliances used during the cheaper rate period will benefit from cheaper electricity overall – not just heating. Not all suppliers offer an Economy 10 tariff and this can cause problems if you want to switch supplier.
Interested in signing up to a new tariff? You can compare actual prices for suppliers by using one of the internet price comparison services that have been awarded with accreditation and conform to the Consumer Focus “Confidence Code” a voluntary code of practice for price comparison services.