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Understanding energy tariffs

This advice applies to England

You could save money on your energy bills by changing your gas or electricity tariff, either with your current supplier or with a new one.

Before you compare the cost of tariffs, you should think about what things are important to you. For example, you might want the cheapest deal and don’t mind being in a long contract.

If you want the cheapest tariff

You might want to choose a 'fixed tariff' or 'capped tariff'. They're usually an energy supplier’s cheapest tariffs.

The names of the tariffs might vary, but look out for the words ‘fixed’ or ‘capped’.

With a fixed tariff, the price of energy is fixed for the duration of a contract, meaning it won't change. With a capped tariff, the price you pay for energy won't go over a set limit, but it may go down. 

These tariffs are good for helping you to budget, as your supplier can't suddenly increase what they charge you for your energy use. 

They might be not so good if you’re looking for a short-term contract. You'll have to sign a contract for a set period of time, and you’ll usually be charged a fee to leave the contract before then.

Your bills could still change depending on how much energy you use - it's only the price you buy energy for that will stay the same.

If you want a more flexible tariff

You might want to choose a ‘standard tariff’ - you won’t be tied into a contract with an end date, and there won’t be a charge to switch to a different tariff or supplier.

The name of the tariff might vary, but look out for the words ‘standard’ or ‘variable’ when you look at what each supplier is offering.

Standard tariffs are usually a more expensive option. They might not be a good choice if you struggle to pay your bills - the price of energy can go up or down, so it could become too much for you to afford.

If you want an environmentally-friendly tariff

You might want to choose a ‘green tariff’. They’re not usually the cheapest tariffs, but they’re a good option if you want to reduce the environmental impact of your energy use.

When you sign up to a green tariff, the energy supplier will use renewable energies like wind or solar to generate the same amount of energy that you use. They have to tell you how much of each kind of energy they are generating for each tariff. Alternatively, they will contribute money to environmental schemes on your behalf.

Other tariffs

There are certain situations when you’ll need to choose a particular tariff.

If you have a prepayment energy meter

If you have a prepayment meter in your home, you can only be on a ‘prepayment tariff’.

Prepayment tariffs are usually more expensive. Even the cheapest one will cost you more than the cheapest direct debit tariff. You also get fewer to choose from.

It's often worth replacing a prepayment meter with a normal meter that lets you pay for energy after you use it, rather than in advance. However, you might not be allowed to do this if you’re in debt to your supplier.

If you have an electric heating storage system

If you heat your home using electric storage night heaters, you’ll probably have to choose a ‘dual rate tariff’ - this is because these systems normally work with a dual rate energy meter, allowing you to get a cheaper rate of electricity at night.

The main dual rate tariffs are called ‘Economy 7’ and ‘Economy 10’ - many suppliers offer this tariff, but their rates will vary.

These tariffs are priced based on you using some of your energy in the cheaper period (usually overnight). If you’re thinking about switching supplier or tariff you should think about how much you would use in the peak and cheap periods.

You might find it hard to find tariffs online, so you may have to call suppliers to see what deals they offer. 

If you have a 'dynamically teleswitched' energy meter, your options for tariffs might be even more restricted. 

If you generate your own energy

If you produce your own energy from renewable sources, for example by using solar panels or a wind turbine, you could potentially sell any excess energy you produce to your supplier through a ‘feed-in tariff’.

The Energy Saving Trust has more information about feed-in tariffs.

Next steps

You can compare gas and electricity prices from different providers.

You can also read our guidance for how to switch energy suppliers.

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