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Energy tariffs explained

By Rachel England Monday 02 December 2013

There’s a bewildering amount of choice out there when it comes to picking an energy tariff. From green plans to online deals, it’s not always easy knowing which is right for you. Here’s a rundown of each:

Dual fuel tariffs

Dual fuel tariffs simply mean that you get both your gas and electricity from one supplier, and often you’re rewarded with a discount for doing so. Many find these tariffs more convenient as you only receive one bill and there’s only one supplier to deal with in the event of a query or complaint.

Capped energy tariffs

A capped energy tariff means that the unit cost of your gas or electricity won’t rise above a certain level during the period of the plan. It may rise slightly, or even go down, but it will never go above the agreed cap. This helps protect you from price increases, but these tariffs may be more expensive than the cheapest tariffs, and may involve a cancellation fee should you choose to leave before the end of the contract.

Fixed energy tariffs

A fixed energy tariff means the per unit cost of your electricity or gas will stay the same for the duration of the plan, which is usually between one and three years. It doesn’t mean that you pay the same amount regardless of how much you use! The biggest attraction of these tariffs is that you’re protected from price increases, but they’re often more expensive than the cheapest tariffs and sometimes involve cancellation fees.

Online tariffs

Online energy tariffs are almost always the cheapest available, and simply mean you sign up online. Some suppliers will continue to send you paper bills and let you manage your account as you would with any other type of tariff, while others will ask that you manage your account online only. In any case, online tariffs usually offer good discounts (more so if you pay by Direct Debit) and increased convenience – most will let you provide meter readings online, for example.

Economy 7 tariffs

Economy 7 tariffs work by offering cheaper electricity at night, making them suitable for those working shifts, or who use a lot of electricity at night time. The ‘7’ stands for the seven hours that the cheaper electricity is available, usually between midnight and 7am, or thereabouts. It’s estimated that you need to use around 55% of your electricity at night to make this tariff worthwhile, and you will need a special type of electricity meter, which may incur a fee.

Economy 10 tariffs

Economy 10 tariffs work a bit like Economy 7 in that they offer ten hours of ‘off-peak’ energy in a 24 hour period, although they’re spread out throughout the day. This usually works out at three hours in the afternoon, two in the evening and five overnight. Unit prices are often half the standard amount, but prices for energy used outside of these ten hours can be higher than usual. You’ll also need a special meter, and a disciplined lifestyle to make sure you’re getting the most from the tariff.

Prepayment tariffs

Prepayment tariffs are fairly self explanatory, in that you must pay for your energy before you use it, much like a pay-as-you-go phone. These plans offer individuals a good way to manage their budget and avoid unexpected bills, but often cost more than other kinds of tariff. Read our guide to prepayment meters here.

Green energy tariffs

Most suppliers offer a more environmentally-friendly energy tariff nowadays. While the actual gas and electricity that is pumped into your house doesn’t change, these tariffs are ‘green’ because the supplier puts back the equivalent of, or a percentage of, your energy consumption into the national grid via renewable energy.

Social energy tariffs

Social energy tariffs were designed to help those in fuel poverty – where energy bills added up to more than 10% of a household’s total income. These tariffs offered a special rate to those who were vulnerable, but since 2011 have been phased out and are no longer available to new customers (those currently on a social tariff should be aware that they will be phased out entirely by 2015). The scheme has been replaced with the Warm Home Discount, which offers a discount on heating costs for eligible individuals struggling to pay the bills.

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