Energy Tariffs and When Switching Is Worthwhile
Energy switching was once a straightforward annual saving. Market conditions changed that, and the decision now requires looking at more than the advertised rate.
The four numbers
The unit rate, charged per unit of energy used.
The standing charge, a daily fee payable regardless of usage. On a low-usage household this can dominate the bill, and a tariff with a low unit rate and a high standing charge can cost more than the reverse.
The exit fee, payable if you leave a fixed tariff before it ends.
The tariff end date, after which you roll onto the supplier's default rate unless you act.
Fixed against variable
A fixed tariff locks the unit rate and standing charge for a period. It protects against increases and prevents you benefiting from decreases.
A variable tariff moves with the market, subject to any cap that applies in your jurisdiction.
Fixing is worthwhile when the fixed rate is close to or below the current variable rate and you value certainty. It is poor value when the fixed rate carries a large premium for that certainty.
Working out your actual usage
Comparison depends on knowing your annual consumption in units, not your monthly payment. The payment is an estimate; the consumption is the fact.
It appears on annual statements, and can be read from a smart meter display or an online account.
Using an estimate produces a comparison that may be wrong in either direction.
What switching actually involves
The new supplier handles the transfer. There is no interruption to supply, since the physical connection does not change.
You provide a meter reading on the switch date, which both suppliers use to close and open the accounts.
The old supplier issues a final bill, which should be checked against your reading.
The reasons not to switch
An exit fee larger than the saving.
A tariff already close to the best available, where the saving does not justify the administration.
Outstanding debt with the current supplier, which can block a switch until resolved.
A supplier whose service you value, which is worth something and is not reflected in a price comparison.
The habit that matters
Diarise the tariff end date. Rolling onto a default rate by inattention is the most expensive thing most households do with energy, and it takes one reminder to prevent.
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