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Which Tariff is Best for Me? Energy Tariffs Explained

Phi Spencer

By Phil Spencer

The average UK household spends around £1,135 per year on energy bills. So, if you’re looking to save money, it’s hard to know whether a fixed or variable energy tariff is the best option for you.

It can be difficult to know the difference between fixed or variable energy.

So, if you’re asking yourself, ‘which tariff is best for me?’ we’re here to help. Read on for energy tariffs explained.

Standard (variable) tariff

This is your energy supplier’s standard tariff. It will have variable prices, not fixed, but beware, this is usually their most pricey option and the default one that every customer will automatically be placed on until they get a deal.

This tariff comes with no contract and therefore no exit fees. You can leave this tariff whenever you see fit.

It may be worth considering if you don’t know how long you’re going to staying somewhere, as there’s no contract and it’s incredibly flexible.

If you’re unhappy with the energy provider you have currently, you don’t have to stay with them. But, it’s essential to do your research. A standard variable tariff isn’t the best option for someone moving to a new house that they plan to stay in for the long term.


Fixed energy tariff

The fixed energy tariff has an end date and comes in three forms:

  • Fixed prices for the length of the contract
  • £X price for a set number of months at the start of the contract (typically a very low rate to draw you in) and then £Y price for the remainder of the contract (typically somewhere near their standard rate)
  • Index-linked prices

If you want to break your contract, you will be charged for leaving it early. However, under new Ofgem rules, if you leave 42-49 days before the end of your contract, you can’t be charged an exit fee.

Bear in mind that if you are on a fixed energy tariff and energy prices suddenly drop, you will still pay the same amount for your utilities. In other words, you won’t benefit from the savings.

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Dual fuel energy tariff

A dual fuel energy tariff meaning is that you get your electricity and gas from the same supplier. By combining your payments, you can save money and potentially get a more attractive deal, as you’re giving the same supplier your custom for both energies.

It is worth bearing in mind, that often the energy company’s cheapest deals are reserved for customers on dual fuel tariffs.

However, this isn’t always as low as the direct saving that you could make by going with the cheapest option, from two separate companies.

Using an online energy comparison service can help you decide which suppliers and tariffs most suit you. Switching utility providers can often help you save money!

Online tariff

Like the majority of paperless options, if you go online, you may typically find a more cost-attractive deal, because the supplier doesn’t have to pay for administration fees, like postage and envelopes.

With an online tariff account, you manage your account solely online and, all of your registration documents and welcome packs are emailed to you.

You will have to submit meter readings online, but for that, you’ll typically get a cheaper tariff.

Prepayment meter

With this method, you have a meter and a prepayment credit card. You must top up the card before you can access the energy. A prepayment meter is usually the option for people who have a history of not being able to pay their bills, so the energy company knows they will get their money in advance.

This tariff can often be expensive, but sometimes a necessity. The good news, however, is that most energy suppliers will offer a prepayment meter tariff, so you can see if you can get a more attractive deal by comparing the various energy deals available.

Never spend too much on your bills!

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