Understanding energy tariff types

What an energy tariff is

A tariff is the pricing structure your energy supplier applies to your account — the set of rates that turn the energy you use into the amount on your bill. Two households with the same supplier can be on very different tariffs.

Most tariffs are built from a unit rate and a standing charge, and the tariff has a name that identifies the exact deal you are on. These usually appear on your bill and in your online account.

• The tariff name, which identifies the specific deal your account is on.
• The unit rate — what you pay for each unit of gas or electricity you use.
• The standing charge — a fixed daily amount that applies even on days you use nothing.

Fixed-term tariffs

A fixed-term tariff locks the unit rate and standing charge for a set period, often expressed in months or years. During that period the rates themselves do not move, whatever happens in the wider energy market.

It is worth knowing that "fixed" describes the rates, not the bill: if you use more energy, you still pay more. The tariff paperwork should state when the fixed period ends and what happens afterwards.

Standard variable and default tariffs

A standard variable tariff — sometimes called a default tariff — is the tariff a supplier places you on when no other deal applies, for example when a fixed-term tariff ends and nothing else is arranged. It has no end date; it simply continues.

Its defining feature is that the rates can change over time. The supplier normally tells you before a change takes effect, and your bill or online account shows the rates that currently apply.

Tracker-style tariffs

A tracker-style tariff ties the price you pay to an external reference, such as a published wholesale price, so the rates move with that reference rather than being set by the supplier at intervals.

Because the price follows the reference, it can change more often than on other tariff types — in either direction. The tariff terms should explain what the price tracks and how often it is recalculated.

What an exit fee is

An exit fee — sometimes called an early-exit or early-termination charge — is an amount a supplier can charge if you leave a fixed-term tariff before its end date. It reflects the fact that you agreed to stay for the fixed period.

Not every tariff carries one, and the amount and conditions vary between tariffs. The tariff information you were given at sign-up, and your online account, should say whether an exit fee applies and how it is worked out.

Standard variable tariffs do not usually carry exit fees, because there is no fixed period to leave early.

How the tariff type shapes price changes

The main practical difference between tariff types is how — and how often — the price can move. Knowing which type you are on tells you what kind of change to expect and where notice of it would come from.

If you are unsure which type you are on, the tariff name on your bill or in your online account is the place to start. The supplier can confirm the type, the end date if there is one, and whether an exit fee applies.

• Fixed-term: the rates stay the same until the end date, after which the tariff usually changes to a default arrangement.
• Standard variable: the rates can move over time, normally with notice from the supplier.
• Tracker-style: the rates follow an external reference and can move frequently, in either direction.
• On every type, the bill still depends on how much energy you actually use.

A note on this guide

This guide is general information to help you understand your own contracts. It is not financial advice or a recommendation, and it does not rank or endorse any provider. Every decision about your contracts remains with you. To see how PEAMO surfaces your contracts and renewals, read How PEAMO works.