What is a ‘standard variable’ rate tariff?

A ‘standard variable’ rate tariff (sometimes called a ‘standard rate’) is an Energy suppliers ‘standard’ tariff, which all customers are on unless they have chosen to purchase a specific other tariff, such as a fixed price tariff. Around 20 million energy customers in Britain are on ‘standard variable’ rate tariffs, and so there is a good chance you could be one of those.

 

Why should you care?

If you are on a standard tariff, the unit prices (the ‘rate’ presented in £ per KwH) you’ll pay for gas or electricity could go up or down at any time and it is generally more expensive than other plans suppliers can offer you. So, if you are one of the 20 million energy customers in Britain on a standard variable tariff, you could be missing out on considerable savings.

At Huru we work with selected energy partners to bring customers excellent fixed price tariffs, that can help you control your costs for up to a year. This means you are unlikely to see large changes in your utility costs and you can have more control over how much you are spending.

Energy companies make large profits by enticing customers with very competitive new joiner tariffs, and then when those end customers are automatically switched to the more expensive standard variable tariffs. We at Huru always have the customers best interest at heart, which is why we promise our customers that we will never let you get switched to the standard variable tariff. We will always remind you when you should switch to a new tariff, and find great deals for you to make sure you are saving money.

 

What about the recent price hikes?

In the last couple weeks, Ofgem (the government regulator for gas and electricity in the UK) has named and shamed energy suppliers over their price hikes. Npower had the highest differential between its standard and fixed price, charging its customers on its standard tariffs £261 a year more than those on its best deals.

Co-operative Energy and First Utility followed suit by raising their standard variable tariff by 5% and 9.7%. As you can see below, standard tariffs are considerably more expensive than a fixed rate tariff in the long-term.

 

Biggest differential between standard and cheapest tariff

  1. Npower – £261
  2. Co-operative Energy – £245
  3. First Utility – £157

Most expensive standard tariffs

  1. Extra Energy – £1,130
  2. Co-Operative Energy – £1,121
  3. Scottish Power – £1,081

Highest proportion of customers on standard tariffs

  1. Utility Warehouse – 94pc
  2. SSE – 91pc
  3. British Gas – 74pc

(Medium average use per annum)

source: Telegraph.co.uk

 

How have energy prices changed over the years?

In 2003, the average household electricity bill was 58% cheaper than its prices in 2016. The government claimed climate change policies contributed 10% to the cost of electricity and foretasted this to rise to 15% by 2020.

A report by the House of Lord Select Committee on Economic Affairs (“The Price of Power: Reforming the Electricity Market”) showed that from 2004 to 2015 retail energy prices have been rising in the UK, and British domestic energy bills have gone from second cheapest in Europe in the early 2000’s to seventh in 2015.

Recent increases in energy prices are being driven by rising wholesale energy costs, and so now is the time to lock down a fixed price contract which can help you control your bills for the next 12+ months.

 

How does Huru fit into this?

At Huru we are focussed on getting the best deal for our customers, and providing the highest standard service possible. Our mission is to make purchasing utility services and managing the payment of those bills as easy and simple as possible.

That is why we promise to always give you the most transparent billing possible, to always make sure you know what tariff you are paying, and to always remind you when you should switch to a new tariff. We never want to let you end up paying more than you need to on a standard variable tariff, so we always make sure we have sourced great deals that can get you a great price and the best service.


Also published on Medium.