Energy tariffs explained

Which energy tariff is right for you?

Choosing the best energy tariff for you depends on your situation, the type of heating system you have, and personal preference. And while price is always a major deciding factor, there are other things to consider.

 

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What is an energy tariff?

An energy tariff is how your energy provider charges you for gas and electricity. Virtually all tariffs are made up of a unit rate (or multiple unit rates), which sets how much you pay for each unit of gas and electricity use, and a daily standing charge – a fixed charge you pay for the facility of having gas and electricity.

There are two main types of energy tariff:

  • Fixed tariff: The cost of your energy is set for a certain amount of time, typically for a year or more. You usually have to pay a fee – known as an early exit fee – if you want to cancel the contract before the end of the fixed term.

  • Variable tariff: This is where your unit rate and standing charge can go up or down based on the Energy Price Cap or wholesale energy prices. These tariffs generally don't have a fixed end date or early exit fee.

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The different types of energy tariff explained

While all tariffs are either fixed or variable, there are several different types of energy tariff within these two main categories. Below we've summarised the main ones.

Standard variable tariffs (SVTs) 

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This is your energy supplier's default tariff, and it's usually the most expensive type of tariff. Most households in England, Scotland and Wales are on SVTs.

Here, the unit rates and standing charges are capped under the Energy Price Cap, which is set by regulator Ofgem, and changes every three months. There are no exit fees, so you're free to switch penalty-free. See our Cheap Energy Club to find the best deals for you.

Who is this good for? As this is a suppliers' default tariff, most people don't choose to be on it. While the rates are capped and it has no exit fees, it's often the most expensive option.

Fixed energy tariffs

A fixed energy tariff provides a set rate for each unit of gas and electricity you use for a fixed amount of time – usually 12 months, but it can be longer. If you want to leave the fix early, you'll usually have to pay an exit fee, though you can't be charged if you're in the last 49 days of your fix.

As the rates you pay are fixed, you're protected if energy prices start to rise. Yet if prices fall, you could be locked in at a higher rate. See our Should you fix your energy guide for more info on fixes, or use our Cheap Energy Club to find the top fixed deals for you.

Who is this type of tariff good for? Those who value price certainty and are happy to stick on the same rate until the contract ends.

Dual-fuel tariffs

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Dual-fuel tariffs are only available if you have both gas and electricity, and are willing to have both with the same supplier. You can have both fixed and variable dual-fuel tariffs.

Many households are on dual-fuel tariffs as it's more convenient. You only have to deal with one supplier and you only get one bill. Plus, some suppliers offer a discount for having both your fuels with them.

Who is this type of tariff good for? Those who want the convenience of one bill and dealing with just one supplier for both their gas and electricity.

  • What if I only have electricity?

    If you only use electricity (for example, you have electric heating, or an oil boiler to heat your home), you won't be able to get a dual-fuel tariff. Yet most tariffs that are available as dual-fuel tariffs are also available if you have electricity only. Check which tariffs are available as single-fuel in our Cheap Energy Club.

Prepayment energy tariffs

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Around four million homes in Britain have a prepayment energy meter, which require you to pay for your energy before you use it. You top up online (if you have a smart meter) or via a key or card, which you buy credit for at newsagents, post offices and garages.

The big advantage of prepay is if you've problems budgeting. Under the Price Cap, prepayment is now the cheapest way to pay for those on SVTs. However, there are a lot fewer prepay deals and the cheapest fixed deals tend to be offered to those paying by Direct Debit.

Who is this type of tariff good for? Those who struggle with bills and debts, and want more control over their day-to-day energy spending.

Tracker tariffs

Tracker tariffs are a type of variable tariff, but the rates you pay can change much more frequently than other variable deals. The Octopus Tracker and Agile Octopus tariffs, for example, can change as often as every half-hour based on wholesale energy prices. This makes it difficult to know whether or not they'll work out cheaper for your home. But these tariffs that have been far cheaper than the Price Cap in recent months, so can be real winners, but you need to understand that if wholesale prices spike, so will what you pay.

Other trackers include E.on Next's Pledge tariff, which tracks the Energy Price Cap. It offers a fixed discount off the Price Cap unit rates for 12 months, promising to stay on average £50 below the Price Cap, so about 3% less (at average annual use). Similarly, EDF Energy's tracker tariff discounts the Price Cap standing charges. Dual-fuel customers on EDF's tariff pay a flat rate that's less than the Price Cap.

Who is this type of tariff good for? Those who don't want to fix but are prepared to gamble on whether wholesale energy costs will go down.

Economy 7 tariffs

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Economy 7 is a type of electricity meter. If you have one, you'll most likely have a specific Economy 7 tariff, which charges you a higher 'peak' rate for each unit of electricity you use during the day and a lower 'off-peak' rate at night. The '7' refers to the seven hours of off-peak electricity you get overnight.

Peak and off-peak rates can vary massively by supplier, so make sure you're getting the best rates. You can check the current average supplier rates in our Economy 7 guide. Many fixed tariffs are also available on Economy 7.

Who is this type of tariff good for? Households with an Economy 7 meter, who typically have an electric heating and hot water system, and/or use a large proportion of electricity overnight.

  • There are also similar 'time of use' tariffs, such as Economy 10

    There are several other, similar, 'time-of-use' energy tariffs. But they're now more of a legacy, and suppliers don't usually promote them to new customers.

    Economy 10 is one example. It's similar to Economy 7, but offers 10 hours of cheaper electricity rather than seven. These cheaper hours are usually split into three different periods, so you get extra boosts of cheap electricity during the day. It needs an Economy 10 meter too.

    Other complex tariffs include Economy 9, Economy 2000 and White Meter. Check with your supplier if you're not sure what meter or tariff you have.

Electric vehicle (EV) tariffs

This type of energy tariff is aimed at owners of electric vehicles (EVs) that use their home electricity to charge their car. There are generally two types of EV tariffs:

  • Two-rate tariffs are most common, and typically the cheapest type of EV tariff. It offers two different electricity rates depending on the time of day, with much lower rates at night. This means you can charge your car cheaply overnight.

  • Single-rate tariffs allow you to pay the same rate throughout the day, but it's often discounted if you have an EV. It works the same way as regular deals, where you pay a flat rate, but you might get a special rate to charge your EV, or you'll get extras such as bill credit.

You can usually only get these tariffs if you own an EV (suppliers say they reserve the right to ask for proof of ownership). See What EV tariffs are available? for our full analysis.

Who is this type of tariff good for? Households that own an electric vehicle and regularly charge it at home.

Heat pump tariffs

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Some providers are starting to launch tariffs specifically designed for homes with a heat pump. Some work in a similar way to time of use tariffs, where the rate you pay for your electricity is different depending on the time of day. Others offer cheaper rates to power your heat pump.

You'll need a working smart meter to get these tariffs. As these are variable tariffs, there are no exit fees, so you can switch to another tariff or energy provider whenever you want.

Comparing these tariffs can be tricky, so you'll have to check out the rates yourself. You can do an energy comparison via our Cheap Energy Club to see the cheapest fixed deals, then compare those rates against heat pump tariffs.

Who is this type of tariff good for? Households that have heat pumps.

Green energy tariffs

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'Green' energy tariffs promise to supply electricity from renewable sources (such as hydro, solar, wave or wind power). It's much harder to offer 100% renewable gas – only one supplier, 100Green, currently offers this.

However, 'green' energy isn't straightforward, as all gas and electricity comes from the national grid, which is a mix of energy from fossil fuels and renewables. For full info, see our Green energy guide.

Who is this type of tariff good for? If environmental considerations are important to you and you want to help reduce carbon emissions by supporting energy from renewable sources.

Solar export tariffs (for selling back energy rather than buying energy)

Households with solar panels can get a solar export tariff. These tariffs don't supply you with energy, instead they pay you for each unit of electricity you generate from your solar panels that you don't use under the smart export guarantee (SEG). You'll need a separate tariff for your gas and electricity supply.

Each supplier sets its own rates, so don't assume they all pay the same under the scheme. You can check what the best rates are in our Solar panels – are they worth it? guide. SEG tariffs can be either fixed or variable.

Who is this type of tariff good for? Those who have solar panels certified under the Microgeneration Certification Scheme (MCS) or equivalent, have a working smart meter, and can export unused electricity back to the grid.

How to choose the best energy tariff for you

To work out which is the best energy tariff, think about what's important to you. If price certainty is a priority, consider a fixed tariff, as the rates you pay are locked in. If you don't want to lock in, consider a variable.

You'll also need to consider the type of meter you have, as this may limit your options. For example, if you have a prepayment meter, you might only be able to get a prepayment tariff (unless you can switch to a standard credit meter).

If you use both gas and electricity in your home, it can often work out cheaper to get both fuels from the same supplier, so opt for a dual-fuel tariff. If you have storage heaters or charge an electric vehicle overnight, a time-of-use tariff (such as Economy 7, EV or heat pump tariffs) could work out cheaper.

If 'green' energy is important to you, you might want to look at tariffs that offer renewable energy. Or if you've invested in renewable technology (such as solar panels, electric vehicles or heat pumps), there are a range of specific tariffs to help cut costs.

If you're not sure what tariff you're on, ask your supplier or log in to your online account to check.

How to switch energy tariffs

Switching energy supplier is a straightforward process and you'll never be without your gas or electricity supply. All that changes is which company you pay your bills to.

If you're on a standard variable tariff, or have 49 days or less left on your current fixed tariff, you're free to switch tariffs penalty-free. If you've more than 49 days left, you may have to pay an early exit fee, which can be as much as £300 (depending on your tariff and supplier).

Step 1: Use a comparison website to compare and find the best deal

To get a bespoke comparison of the top energy deals available to you, use a comparison website, such as our Cheap Energy Club.

You'll need to plug in your address, your current energy supplier and tariff, and how much energy you use in a year (you can grab a recent bill to check this). If you don't know your actual energy use, most comparison sites can estimate for you.

Step 2: Choose your new tariff and decide when you want to switch

When comparing tariffs, consider which tariff is right for you, and remember to factor in things like exit fees and tariff length.

Step 3: Switch!

You can do this via comparison sites or directly with the supplier, either online or over phone. Your new supplier will handle the whole process, so there's no need to contact your old supplier.

Do remember to take a meter reading on the day your switch completes (your new supplier will let you know when this is). This will be used to work out your final bill with your old supplier.

Once you've applied to switch, it should take around five working days. However, you still have a 14-day cooling-off period if you change you mind. If you cancel it within this period, but you've already been switched, you'll be moved back to your old supplier – though you'll have to pay the new supplier for any energy you used while you were with it.

Energy tariff FAQs

  • What are the current energy prices?

    For households on a standard variable tariff, your unit rates and standing charges will be based on Ofgem's Energy Price Cap. For a typical home, the current Cap is £1,568 a year for someone paying by Direct Debit.

    But remember, the Cap is not a cap on how much you pay – it only limits standing charges and gas and electricity unit rates, so if you use more, you pay more.

    The rates you pay also depend on where you live, how you pay for your energy bills and the type of meter you have. You can see current rates for your region and payment method in our Energy Price Cap rates guide.

    If you're not on an SVT, for example, you're on a fix, you can usually check your rates on a recent bill or in your online account.

  • Is now a good time to get a fixed energy deal?

    We get asked this a lot, and there's no easy answer. There's no right time to fix – it all depends on what fixed tariffs are currently available, and what's expected to happen under the Energy Price Cap (the do-nothing option).

    Based on current predictions, if you find a fix for up to 8% more than the current (July to September) Price Cap, it's predicted you'll save over the year compared to staying on the Price Cap.

    Yet predictions can change – much of this is based on crystal-ball gazing.

    See our Should you fix? guide for full info, or use our Cheap Energy Club comparison to get a bespoke prediction (based on your usage, area and payment method) of what's currently available and how it compares to your price-capped tariff.

  • WIll I pay the same amount each month on a fixed tariff?

    No, a fixed-rate tariff doesn't mean you'll pay the same amount each month. A fixed-rate tariff sets the unit rate (kWh) and the standing charge for a fixed period, usually a year or more. The amount you pay each month will depend on how much gas or electricity you use in that period. Use more and you'll pay more.

  • Can I switch without paying exit fees?

    If you're on a fixed tariff, you can switch to another tariff or provider without penalty within 49 days of your contract's end date.

    Variable tariffs don't tend to have exit fees, so you can usually switch whenever you like without penalty. But do check with your energy provider.

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