Discover all there is to know about standard variable tariffs (SVTs). If you’re on an SVT, find out how they work and how to switch away from your standard energy deal.
What is a standard variable tariff?
A standard variable tariff (also known as a “default tariff”) is an energy deal that has variable prices and no exit fees. What this means for energy consumers is that fuel prices can go up or down at any time (as opposed to a fixed tariff), however you are free to switch away if prices rise.
Standard plans are often an energy supplier’s most expensive. You’ll usually be put on a standard variable tariff that you haven’t chosen if your fixed-term contract ends and you haven’t switched to a new one. You’ll also be on an SVT by default when you move into a new property and take over the energy bills.
“A basic energy tariff with variable prices that can go up and down with the market. These tariffs are often more expensive than a fixed-term tariff.”
How do variable energy tariffs work?
Variable tariff prices are determined by changes to wholesale prices within the energy market. If wholesale prices go up, these increases will be reflected in your bill and vice versa. Wholesale prices refer to the costs incurred by your supplier in purchasing the fuel you use. To find out more about wholesale prices and what else drives fuel prices, have a look at our UK energy market guide.
How can I check if I’m on a standard energy plan?
The best way to find out what tariff you’re on is to look at a recent bill. You should be able to find the tariff name either on a paper bill or in your online account. If you don’t have a bill to hand get in touch with your supplier to ask for your tariff name and details.
Note, while many suppliers use clear names such as “Standard Tariff”, which can easily be identified as the default rate, others use misleading names like “Flexible Saver”. If you’re on a fixed tariff, your bill should also include a tariff end date and details of exit fees. So, if these are missing, you’re likely on a standard tariff.
If you’ve never switched supplier then it’s likely you’re on an overpriced standard tariff, so make sure to check if you can save.
Should I choose a standard or a fixed plan?
Most of the cheapest tariffs on the market are fixed for 12 months. So, it’s normally better to sign up for a fixed energy deal. However, fixed energy tariffs can come with exit fees, so if you need flexibility, for example if you might move out in under 12 months, a standard tariff is a good option.
Stay away from standard tariffs offered by the Big 6. These are generally very overpriced, and you can end up paying over £300 more per year than you should be.
There are some suppliers that offer cheap standard tariffs such as Bulb who use a single SVT for all their customers.
What are the pros and cons of standard variable plans?
- Increased flexibility with no exit fees or end-date
- If wholesale prices fall so can your bills (although suppliers won’t always pass the savings on)
- Generally, more expensive than fixed deals
- Your supplier can increase your prices at any time
I’m on a standard variable tariff, what do I need to watch out for?
If you’re on a standard tariff, first make sure that you aren’t paying a lot more than you should. Run a price comparison and see if there are much cheaper deals elsewhere. If you need flexibility, then compare to other deals without exit fees.
If you are paying an ok rate for your energy on your SVT now, then you just need to make sure it stays that way. Keep an eye out for emails from your supplier about price increases. Consider signing up to an auto switching service to monitor the market for cheaper deals.
Are standard variable tariffs any good?
Sometimes. If you’ve just moved house, for instance, you’ll be able to get a smooth supply of gas and electricity right from day one thanks to a standard variable tariff, and once you’ve moved in you can switch to a better deal without worrying about exit fees.
Even though prices can increase, most suppliers will give you 30 days’ notice when default prices are about to rise.
Why do energy prices change on a standard variable tariff?
The most common reason for standard variable prices to rise is an increase in wholesale energy prices. A supplier can also choose to increase their SVT rate at any point, for example if other costs have increased such as adding more resource to their call centre, or if they just want to boost their profit margins.
SVTs also have to obey the price cap, so if Ofgem reduce the maximum amount a supplier can charge for energy then suppliers may have to reduce their standard variable rates accordingly.
What should I do if my variable prices rise?
If your supplier has increased your costs, then you should run a price comparison to see if you could save money by switching elsewhere. It’s easy to switch away from a variable tariff as you aren’t tied in with exit fees.
How much do Standard Variable Tariffs Cost?
Standard variable tariffs are usually priced at or close to the Ofgem price cap. Between the 1st October 2020 and 31st March 2021 the default cap is set at £1,042 for typical energy usage.
How can I switch away from a standard variable tariff?
One of the benefits of a standard variable tariff is that it’s easy to switch to a new deal, without being hit with an exit fee.
If you’re currently on an SVT the best thing to do is to run a price comparison to compare what you’re paying now with the available fixed tariffs on the market. Once you find a better deal, start a switch to the new supplier.
Will I be charged a fee for leaving my standard tariff?
No. One of the benefits of standard or default tariffs is that they do not charge exit fees.
Will my standard tariff come to an end?
No. Standard tariffs do not have end dates, but the supplier can increase the price of your tariff at any time.
If you are on a fixed tariff and you don’t switch you will normally roll on to you suppliers’ standard tariff at the end of your contract.
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