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Tariff types

Energy tariffs

• What are standard tariffs and are they really so bad?

• What other choices are there?

What are tariffs?

The term tariff refers to the name of a gas and/or electricity plan. It’s not a fee in the normal sense of the word, but it does determine the rates you are charged as well as any additional features.

Many people think that the only choice they have when it comes to their energy supply is which company to go with. However, some of the bigger energy suppliers can have around ten different tariffs available for customers to switch to, and the difference between one supplier’s cheapest and most expensive tariff can be over £400 for some customers! Energy tariffs are frequently withdrawn from sale and new ones introduced with different rates and features to reflect gas and electricity prices.

Types of tariff available

There are four main types of gas and/or electricity tariff: standard, fixed or capped, online and green. Watch our short video guide below for more information on the choices available...

What are fixed tariffs?

Fixed tariffs are where the rates you are charged for your gas and/or electricity cannot change for a period of time which is often specified in the name, eg. Fixed Price September 2012. This doesn’t necessarily mean that your bill will always be the same – it will still vary by how much gas and/or electricity you use, but it means that even if your supplier announces a price rise, your rates won’t go up. They are usually a little bit more expensive than the cheapest available tariff, but if your supplier is likely to announce a price rise, they can end up being the cheapest option over the course of the 1-4 years of your plan.

However, fixed tariffs do have cancellation fees if you decide to switch tariff before the end of the plan. Visit our page on switching from a fixed/capped tariff for more information.

What are capped tariffs?

A capped tariff is the same as a fixed tariff in that your supplier cannot increase your rates for the duration of your plan. However, the added bonus is that your rates can also go down if your supplier reduces its standard rates.

Which tariffs are cheapest?

Online gas and electricity tariffs are invariably the cheapest. These are tariffs that you may only be able to apply for over the internet. This is why they are so cheap: the energy company doesn’t have to pay for a salesperson to sign you up. These tariffs sometimes require you to manage your account online (eg. paying bills, entering meter readings) rather than receiving a paper bill and calling the energy supplier for services. However, many online tariffs do allow you to do this and can still be cheaper than other plans.

What are standard tariffs and are they really so bad?

The standard tariff is the supplier’s default plan that you will be on if you have never switched tariff. They are always more expensive than the supplier’s online tariffs because you aren’t taking advantage of any discounts. What’s more, they offer no protection from price rises, so as soon as your supplier increases its prices, your rates will go up. If you want to stop your prices going up, you could consider a fixed or capped tariff.

However, in response to complaints of energy suppliers making it too complicated by having so many different tariffs, some suppliers are now choosing to have just one, standard tariff rather than a mix of fixed and online tariffs. By keeping it simple, they are able to offer a cheaper standard tariff than most.

As always with energy supplies, one size doesn't fit all, so depending on your area and usage, a standard tariff may suit your needs.

What other choices are there?

The other choices you have include how you pay your bill, which can affect the amount you pay. Most suppliers offer a discount if you pay by monthly direct debit, rather than waiting for them to send you the paper bill every quarter.

Watch our video clip below for more choices on paying your energy bills...

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Tariff types

Energy tariffs

• What are tariffs?

• Types of tariff available

• What are fixed tariffs?

• What are capped tariffs?

• Which tariffs are cheapest?