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Types of Tariffs: Standard Variable


Other Types of Energy Tariff:


What are Standard Variable Tariffs?

Among the various electricity and gas tariffs customers can choose is the standard tariff, which most large energy suppliers offer.

Standard Variable Tariffs are the most common tariff types in electricity and gas. Most suppliers have a default tariff you can switch to if you do not have another preference. The advantage of Standard Variable Tariffs is that they are flexible: no exit fees, no contracts. The disadvantage of Standard Variable Tariffs is that they are often more expensive than fixed-price tariffs. Among the Big Six, Standard Variable Tariffs yield annual costs ranging from £1,164 to £1,205.

The Energy Supplier’s Default Tariff

When you move homes or switch energy companies but do not know what offer to select, you are likely to be offered the supplier’s default tariff, also called standard tariff or evergreen tariff. Standard Variable Tariffs are energy suppliers’ simplest, though sometimes more expensive, tariffs.

Beware: It is almost impossible to compare only Standard Variable Tariffs as most suppliers include various discounts for online account management or buying both electricity and gas from the same supplier. It is in customers’ interest to compare as many electricity and gas offers as possible and filter out the options they find unnecessary.

Standard Variable Tariffs change with variations in the electricity and gas markets

People who select Standard Variable Tariffs with an energy supplier expose themselves to prices that change with electricity and gas market variations. Standard Variable Tariffs are never fixed-price contracts. Therefore, for the same electricity and gas consumption, your bill will increase or decrease with the price your supplier pays its generator for electricity and gas. This is why some customers are averse to Standard Variable Tariffs: price variations make budgeting more difficult.

Standard Variable Tariffs are the most flexible electricity and gas tariffs

No contracts or early exit fees

Unlike fixed-price tariffs, Standard Variable Tariffs do not involve contracts. This means customers on Standard Variable Tariffs are not bound by an agreement with their electricity and gas supplier and can leave whenever they need to. This also means that customers on Standard Variable Tariffs are not subject to exit fees, which range between £15 and £30 per fuel, if they choose to move or switch suppliers. Thus, Standard Variable Tariffs can be more convenient than fixed-price tariffs for customers who choose freedom over price security.

Let customers choose their payment method

While fixed-price contracts tend to impose monthly direct debit payments on customers, Standard Variable Tariffs offer more flexibility. Large energy supplier customers can choose monthly direct debit (often with a discount), quarterly direct debit, or payment on receipt of bill (quarterly, usually) by card or cheque. For customers who wish to remain vigilant about what they are being charged for electricity and gas, Standard Variable Tariffs provide for the necessary leeway.

How much do Standard Variable Tariffs Cost?

According to the Department of Energy and Climate Change, as of March 2014, the average annual electricity bill on a standard tariff (credit) is £621 and the average gas bill is £791. Therefore, no-discount dual-fuel bills average £1,412 per year. However, it is crucial to remember that these are averages and not representative of what you might expect to pay for a standard tariff electricity, gas or dual fuel offer.

Standard tariff general comparison for June 2014

A rough comparison in June 2014 of variable rate plans on Standard Variable Tariffs (direct debit and payment on receipt of bills) for the average UK energy consumption (3,200 kWh for electricity and 13,500 kWh for gas) yields estimated annual costs ranging from £1,043 with Spark Energy (conditions: online account management, monthly direct debit) to £1,278 with Ebico. However, tariffs change monthly among the 30+ suppliers in the UK so these costs are but an indication of the price range for a single tariff.

The Big Six's Standard Variable Tariffs

To give you a more precise idea of what Standard Variable Tariffs represent in terms of cost, here is a comparison between the UK’s six largest electricity and gas suppliers based on the average UK consumption for June 2014.

Supplier

Estimated annual cost

British Gas Logo

£1,193

EDF Energy Logo

£1,164

e.on logo

£1,170

npower logo

£1,205

Scottish Power logo

£1,199

SSE logo

£1,186