What is a Standard Variable Energy Rate?

Here at National Energy Direct we understand that not everybody is an expert on the technical terms or intricacies of utility and energy topics, that’s why in this blog we’re going to discuss standard variable energy rates, how they are relevant, and some of the pros and cons of this type of tariff.

What Is An Energy Tariff?

An energy tariff is the method in which energy supply companies charge consumers for the gas and electricity they use.

An energy tariff usually consists of two costs:

Unit Rate - this is the price consumers pay for gas and electricity, charged at pence per kilowatt hours (p/kWh).

Standing Charge - a set daily cost for the energy supplied to a home, this is irrespective of the amount of gas or electricity being used (meters and distribution services are covered).

Standard Variable Energy Rates

A standard variable energy rate is a form of utility payment tariff where the price a consumer will pay per unit of energy, will fluctuate monthly in accordance with the wholesale price of energy.

Essentially if energy prices go up a consumer will pay more, if prices drop a consumer will pay less.

A standard variable energy tariff is in contrast to a fixed rate tariff, this is where a consumer will pay a fixed price per unit of energy for a set period, in most cases this is 12-18 months.

Pros Of A Standard Variable Energy Rate

If you are willing to take the risk of potentially paying higher prices should the market cost rise, you could alternately feel the benefit if it were instead to fall, paying less for the same amount of (if not a tad more) energy you are using.

Unlike being locked into a fixed rate contract, standard variable rate tariffs are actually open ended, meaning that there is no pre-agreed tariff length; you can leave the contract whenever you like.

There is also no exit fee upon leaving a standard variable rate tariff, meaning you won’t be charged by your current energy supplier should you find a better deal on the market and wish to switch.

Cons Of A Standard Variable Energy Rate

There's no guarantee that energy prices won’t continue to skyrocket as they currently are, due to the ongoing European energy crisis. With Ofgem setting a second successive record high energy price cap, now residing at £3,549 effective as of October, you will be at the mercy of the volatile and ever fluctuating energy market.

Due to the precarious nature of a standard variable tariff, it can be difficult to budget your income and plan in advance, as expected payment costs may change.

How To Check What Type Of Energy Tariff You Have

It’s really easy to check the type of energy tariff you are currently on, all you have to do is check over a recent energy bill for the information by logging into your online account (if you don’t receive or keep paper bills).

If you have never actively changed your energy plan, you are more than likely on a supplier’s standard variable rate, or if your previous fixed term contract has expired and you didn’t elect to switch to a new plan, you may have automatically been rolled onto the supplier's standard variable plan.

How To Change Your Energy Tariff

Firstly, you will need the following information ready and available should it be required-

Name of current supplier
Name of current energy tariff
Current annual energy usage costs
Postcode

It’s advantageous to weigh up several potential tariff options via a comparison website, cost, customer service, flexibility and exit fees should all be considered before committing to a switch.

Once you have decided which tariff and supplier is right for you and your property’s requirements, you will need to confirm your contract and payment method, your new supplier will then contact you with a switch date (this may take up to 5 working days).

(IMPORTANT - You have 14 days to cancel from when you agree to the contract)

National Energy Direct

We are a fully accredited multi-utility connections and delivery team who specialise in new build domestic properties, commercial and industrial units, as well as catering for all aspects of the energy market.