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The time has come to choose a new energy tariff. First, consider your lifestyle and budget. Next, choose an energy plan that ticks your boxes. Simple right? But with so many different energy tariffs on offer, things can get a little overwhelming. To make it easier, we’ve shared a rundown of the most popular options to help you decide on the right energy tariff for you.
Let’s not over complicate things. An energy tariff or energy plan (as it's sometimes called) tells you how much you will be charged by your energy supplier for your gas and electricity.
Spoiler alert - most energy suppliers don’t generate their own energy! Instead, they buy it wholesale and then sell it to you. The wholesale price they pay will largely determine how much you will pay.
When it comes to comparing energy deals, it’s worth knowing what’s included in the tariff. The more clued up you are, the better chance you get of securing the right energy tariff for you.
Below we’ve explained some of the most popular energy tariffs. Keep in mind that most tariffs will be offered on either a fixed or variable basis - so don’t skip on those sections!
It’s also worth noting that some suppliers might give slightly different names to their tariffs, so knowing this information will help you determine exactly what you’re buying into.
What are fixed-rate energy tariffs?
Fixed-rate tariffs set a price that the customer pays per unit of energy (kilowatt hour or kWh.) The price is decided at the beginning of your contract and remains the same until the end of your contract, which will usually last between 1 to 2 years.
Your energy bill will vary from one month to the next, depending on how much energy you use. But you will continue to pay the same unit price for energy throughout your entire contract.
Benefits of Fixed-Rate Tariffs
The good news? If wholesale prices of energy go up, your bills won’t get any more expensive as your unit price is fixed.
Disadvantages of Fixed-Rate Tariffs
The downside? If wholesale prices of energy drop, you’ll miss out on the savings. And if you decide to switch to another provider before your contract ends, you’ll likely face a costly exit fee.
Before signing up for a fixed energy tariff, read the small print and find out how much you’ll have to pay if you choose to terminate your contract early. On average it’s around £30 per fuel. This means if you’re on a dual fuel fixed contract (we’ll get onto those later), you’ll be required to pay 2 separate exit fees.
Want to switch energy providers towards the end of your fixed energy tariff? Ofgem to the rescue! The regulator states that no exit fees should be charged if your fixed energy tariff has fewer than 49 days left.
Variable tariffs are a standard default tariff offered by energy suppliers. They differ from fixed tariffs, as the cost per unit of energy will go up or down, depending on the wholesale market price.
Benefits of Variable Energy Tariffs
Like flexibility? So do we - hence why we choose to offer one simple variable energy tariff, that is competitively priced - Igloo Pioneer. With variable energy tariffs, you’re not tied into a lengthy fixed contract, you can switch energy suppliers whenever you like and you won’t have to pay expensive exit fees.
Even better, if the wholesale price of energy drops, you could make significant cost savings on your energy bills.
Disadvantages of Variable Tariffs
Like with anything in life, there’s pros and cons, and the same applies to variable tariffs. The disadvantage being that if the wholesale energy price increases, so could your bills. However, it’s worth noting that Ofgem sets a price cap twice a year to limit how much suppliers can charge their customers.
And remember, there’s always the option to switch variable tariffs without exit fees. Choose a trusted supplier like Igloo with the knowledge that we’ll always price our energy as competitively as possible.
Dual fuel tariffs make life a little easier by offering gas and electricity from the same supplier. It’s more convenient, as you’ll only receive one bill for your energy and we’ll let you into a little secret...it often works out cheaper!
Having said this, it’s always worth doing your research and comparing individual suppliers to check you’re getting the best deal. You’ll also need to decide between a dual fuel fixed tariff and a dual fuel variable tariff.
Here at Igloo, we offer dual fuel (electricity and gas) on a variable tariff allowing new and existing customers to benefit from the best possible rate. No teaser rates. No exit fees. Just a competitive and straightforward variable energy tariff.
Prepayment Energy Tariffs
Rather pay for your fuel upfront? Prepayment or pay as you go energy tariffs give you the option to top up your account online, just like you would with a pay-as-you-go mobile phone.
If you’re on a strict budget, it’s a good way of controlling how much you’re spending on energy. The only trouble is it often works out more expensive than other energy tariffs.
Green energy suppliers vow to match some or all of the electricity you use with renewable energy from biomass, solar, tidal and wind sources, which is fed back into the National Grid. Essentially, the more people that choose green energy tariffs, the higher the percentage of renewable energy in the national supply.
The way this is accounted for is through a scheme managed by Ofgem called the Renewable Energy Guarantees of Origin, or REGOs for short. REGO certificates are issued to generators of renewable energy and allow generators to prove that a certain amount of green electricity has gone on to the grid. Energy suppliers can then purchase these certificates to allow them to ring-fence an equivalent amount of the UK’s renewable supply for the energy they have sold. We have used this system ensuring that 100% of our electricity came from renewable sources.
If you’re concerned about the impact on the environment and want to do your bit to reduce global warming, it’s worth looking into green energy tariffs. Many green energy providers offer additional incentives, such as carbon offsetting and tree planting initiatives too. Again, green energy tariffs can be fixed or variable. Choose a variable energy tariff to avoid lengthy contracts and exit fees.
However, not all green tariffs are equal. Some green energy suppliers have ‘greener’ fuel mixes than others. Before signing up, make sure your electricity will be matched 100% with renewable energy. Your supplier is required by law to provide this information. At Igloo we provide our customers with 100% renewable electricity.
Don’t panic - Economy 7 and 10 energy tariffs aren’t as complicated as they sound. They’re basically off-peak tariffs, with the numbers referring to the hours during which you’ll pay less for your energy.
If your lifestyle suits off-peak hours (such as night time), you can benefit from lower energy rates. So if your work shifts or you’re more of a night owl than a morning person, it could be the best energy tariff for you. It’s also worth considering if you have an electric vehicle you want to charge overnight. Typically Economy 7 tariffs will offer a cheaper rate between 00:00am and 06:00am, with the more expensive rate covering the remaining hours. These times can differ per supplier, so it is worth checking your tariff details.
Just keep in mind that any energy units used outside of the off-peak hours will be charged at the much higher rate. You’ll also need to account for the extra cost of installing a specialist meter if you haven’t got one already. If you live in a block of flats with electric storage heaters, you will likely find an Economy 7 meter installed already.
Like with the other options, you may be required to pay an exit fee for the early termination of a fixed energy tariff.
Unlimited energy tariffs are new to the market and allow you to use as much energy as you like during your contract period (usually 1 year).
If you’re part of a large household that uses a lot of energy it could be an attractive plan to consider. Know exactly how much you’ll pay each month, regardless of the energy you use.
But be careful! Always read the small print. Some tariffs aren’t as ‘unlimited’ as they first appear and usage might be capped.
From an environmental point of view, encouraging excess energy use is problematic. Without the financial incentive to switch off lights and unplug appliances, people will likely waste a lot of energy, which isn’t good for the planet regardless of whether it’s 100% renewable energy or not, and will result in you generating a much higher carbon footprint.
Enter your meter readings and pay your bills online - an online energy tariff is as simple as that!
The rates are usually cost-effective, as the supplier has fewer admin costs. It’s convenient for customers and completely paperless so it's good for the environment too. But if you’re not confident with managing an online account it’s probably not for you, and it is also worth noting that some online energy tariffs do not offer telephone customer support, so if you have any issues you'll have to rely on email correspondence, but you should always check this before signing up.
It’s also important to check customer reviews and make sure you’re happy with the contract you’re on. Don’t get tied into a lengthy fixed-rate tariff if you think there’s a chance you’ll want to swap providers a few months down the line. Citizens Advice is a great place to check customer service ratings, and we are proud to have been ranked first in these, so you should always check to see your potential supplier is providing great service, and not just a cheap price.
Feed-in Tariffs (FiT) were developed to support customers generating their renewable energy via solar panels and wind turbines. Customers are paid for any excess energy that is generated and pumped into the National Grid.
Unfortunately, you’ve missed the boat for this one as the scheme closed to new customers in April 2019. However, if you have the assets to generate renewable energy, you can now apply for the Smart Export Guarantee instead.
The Smart Export Guarantee (SEG) enables customers to sell their home-generated green energy to the National Grid. You don’t have to be with the same supplier for your gas and electricity to benefit from SEG. But you will need to meet various requirements and install either a smart meter or export meter to benefit.
No one wants to spend all of their time researching tariffs and keeping track of how much they’re spending. Igloo makes buying energy simple with a single, straightforward variable energy tariff - the Igloo Pioneer.
We don’t believe in gaining new customers through teaser rates and we won’t tie you into a lengthy contract. Instead, we offer all of our customers the best possible energy rates at all times, and because the tariff is variable we are often able to reduce our prices.
Choose Igloo for your dual fuel energy tariff.
We hope our handy guide has helped you choose the best energy tariff for your household.
Once you’ve decided on a plan, switching is the easy part. Sign up with your new supplier and they’ll take care of the rest. You’ll switch within 21 days, with no disruption to your energy supply. All you need to do is pay your final bill to your old supplier, and take a final meter reading. Simple!