Your energy bills can account for a significant proportion of your home’s running costs, but there may be ways to reduce your costs. Firstly, you’ll need to understand exactly how energy companies charge their customers and this means getting to grips with energy tariffs.
How Do Energy Tariffs Work?
Energy providers use tariffs to sell their products. So, your electricity tariff determines how much you have to pay for electricity, for example.
If your energy tariff states that you’ll be charged 17p/kWh, this means that you’ll pay 17 pence per kilowatt hour of electricity usage. If you use 10 kilowatt hours of electricity, it will cost £1.70, but if you use 100 kilowatt hours, it will cost £17.00.
However, if your energy tariff states that you’ll be charged 22p/kWh, you would pay £2.20 for 10 kilowatt hours of electricity and £22.00 for 100 kilowatt hours.
As you can see, the energy tariff you’re on has a major impact on your overall costs. By choosing the right tariff, you can reduce the amount you spend on energy.
What Is a Fixed Rate Energy Tariff?
A fixed rate energy tariff means you will pay the same rate for fuel for a specific period of time. If you have a fixed rate tariff that lasts for 12 months, for example, the rate will not change for a year. Fixed rate tariffs usually run for one or two years, although this varies from one supplier to another. If you want to leave a fixed rate tariff early, you may incur an additional fee.
What Does a Fixed Energy Tariff Mean for Homeowners?
When you’re on a fixed energy tariff, it can be easier to budget. If you tend to use the same amount of electricity every month, for example, a fixed rate means that it will be easy to estimate how much your bills are likely to be. This is because the rate remains fixed, rather than being subject to changes.
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What Is a Variable Energy Tariff?
A variable energy tariff means that the rate you pay for fuel can change at any time. However, rate changes usually happen in response to wholesale energy prices, rather than randomly. Furthermore, energy companies usually give customers advance notice if a rate change is going to take place.
What Is a Green Energy Tariff?
A green energy tariff means that your supplier pledges to match some or all of the electricity you buy with energy from renewable sources. The renewable energy they purchase is then fed back into the National Grid. As a result, the more people who choose a green energy tariff, the more renewable energy is used nationwide.
How to Compare Energy Tariffs?
Fixed, variable and green energy tariffs are only a small selection of the tariffs available. For example, you could choose a fixed economy 7 energy tariff, which means you’ll pay two different rates for electricity, depending on whether you use the power during on peak or off peak hours. Alternatively, you could opt for a variable economy 10 energy tariff, which also charges two different rates but splits the off peak hours across both day and night.
When comparing energy tariffs, it’s important to compare like-for-like offers. A fixed rate may seem more expensive than a variable rate based on current prices, for example, but, if the variable rate increases, the fixed rate would become the cheaper option. To ensure you’re getting the right information, be sure to compare like-for-like rates from different providers.
Which Energy Tariff is Best?
The best energy tariff usually depends on your energy usage and your personal preference. If you like to have certainty about your bills, a fixed rate might suit you best. However, if you’re prepared to accept the risk that prices may rise but believe the wholesale prices for energy will drop, you may be better suited to a variable rate.
How to Find the Best Energy Tariff?
The ‘best’ energy tariff depends on your household and how you use power. Due to this, it’s important to assess your energy consumption and compare providers accordingly.
If you tend to use electricity throughout the day at different times, an economy 7 or economy 10 may not match your usage needs. However, if you can switch your energy usage to specific times or during the night, you could save money by choosing one of these tariffs.
To get an idea of the different options available, take a look at the tariffs offered by these well-known energy providers:
What are Avro Energy Tariffs?
Avro Energy tariffs include their No Standing Charge Energy Tariff; Simple and SuperGlow; Simple Energy, Simple and SuperPrime; Simple and SuperPremium.
What are British Gas Energy Tariffs?
British Gas energy tariffs include Complete Protection Fixed; Home Energy Fixed; Green Future Fixed; Standard Variable and Safeguard PAYG.
What are Bulb Energy Tariffs?
Bulb energy tariffs include a pay monthly or pay-as-you-go option. However, they only offer one main tariff: Vari-Fair.
What are EDF Energy Tariffs?
EDF Energy tariffs include More Together; Better Together; Energy Direct; GoElectric; Fix Total Service; Flexible Control; Easy Online 2 Year Fixed; Together Online 1 Year Fixed; Standard (Variable) and Easy Online + Smart Home.
What are EON Energy Tariffs?
EON energy tariffs include Fix and Drive; Energy Plan; Secure; Fix Online; Fix 2 Year; Fix 18 Month and Fix 1 Year.
What are Green Network Energy Tariffs?
Green Network Energy tariffs include Family Green 18 Month Fixed; Standard Variable and Italian Touch 12 Month Fixed.
What are Octopus Energy Tariffs?
Octopus Energy tariffs include 12 Month Fixed; Flexible; Supergreen; Tracker; GO and Agile.
What are OVO Energy Tariffs?
OVO Energy tariffs include Better Smart Energy; Better Energy; 2 Year Fixed Energy and Simpler Energy.
Am I Getting the Cheapest Energy Tariffs?
As you can see, different providers use different names for their tariffs, which can make it hard to determine which is the cheapest. However, all plans are either fixed or variable. Similarly, virtually all plans fit into the following categories: single rate, economy 7 or economy 10. In addition to this, some tariffs can be prepaid, whereas others need to be paid monthly.
Providing you compare like-for-like tariffs from different provides and estimate your usage correctly, you can find the cheapest energy tariffs to suit your needs.
How can I Compare Energy Tariffs Now?
The most effective way to find the cheapest rate is to compare energy tariffs from providers who serve your area. All providers make their rates and tariffs available online, so it’s easy to see what’s available. However, it can be far quicker to use a comparison site to compare a range of energy tariffs at once.
Do Energy Tariffs Really Matter?
Many people make the mistake of assuming the tariff they choose won’t make much of a difference to their overall bills. Unfortunately, this line of thinking can result in you paying more than you have to for energy. The tariff you choose has a major impact on what you pay, whether that’s monthly, quarterly, annually or in advance via a prepayment. By taking the time to choose the right tariff, you can substantially reduce your energy costs.
Should I Fix My Energy Tariff Now?
Only you can decide whether to fix your energy tariff and, if so, whether now is the right time to do it. If global energy prices are particularly high, it might not be the right time to fix your energy tariff. However, if rates are relatively low, it could be a viable option. It’s important to remember, however, that most fixed rates run for a specified period of time and you’ll be required to pay a fee to leave early.
In contrast, you can usually leave a variable tariff at any time. Of course, you do run the risk of paying more for your energy if rates rise while you’re on a variable tariff. However, if you like to watch the markets and you don’t mind taking a risk, choosing a variable rate could be an effective way of saving money on your energy bills.
What Energy Tariff Should I Be On?
The most suitable energy tariff for you depends on how much energy you use and when you use it. Furthermore, the type of energy you use could have an impact on what the best deals are. If you use both gas and electricity, a dual fuel tariff could be the cheapest and easiest way for you to access both types of fuel.
All homeowners should monitor their energy usage so that they can determine what type of tariff is best for them. Once you know how much energy you use on average and when your usage peaks, you’ll be able to decide which type of rate is best.
Who Has the Cheapest Energy Tariff?
Energy companies offer a wide variety of tariffs and the cheapest usually depends on your personal circumstances. If you only use electricity during the night, a fixed economy 7 rate from Provider A might be cheaper than a single variable rate from Provider B, for example. However, if you only use electricity during the day, the single variable rate from Provider B could prove cheaper than the fixed economy 7 rate from Provider A.
Instead of looking for the lowest figures, be sure to assess which provider offers the cheapest rate based on your needs. This will help you to find the cheapest energy rate for your household and enable you to reduce your energy expenses.