Energy plans: What is a ‘standard variable’ rate tariff and how does it compare?

Mae’r dudalen yma ar gael yn Gymraeg.

This guide will help you understand what ‘standard variable’ rate energy tariffs are, how they compare to the cheapest deals on the market and how many people are on them.

What is a ‘standard variable’ rate tariff?

Energy is an essential service. So even if you do not choose a tariff, your supplier must continue to provide you with energy. A ‘standard variable’ rate tariff (sometimes called a ‘standard rate’) is a tariff you’ll be put on if you’ve not chosen a specific energy plan. You will be on this tariff until you make a choice to take up another offer – it won’t expire. It’s an energy supplier’s basic offer.

For example, if you were on a ‘fixed-rate’ plan that’s expired you could be moved to your supplier’s ‘standard variable’ rate tariff until you’ve chosen a new one. You may have also made an active choice to select a ‘standard variable’ rate tariff.

If you are on a standard tariff, the unit prices (the ‘rate’ presented in £ per KwH) you’ll pay for your gas or electricity could go up or down at any time. Your supplier must give you advance notice if prices increase, or where there are other changes to your disadvantage.

All suppliers have a ‘standard variable’ rate tariff. It is usually more expensive than other plans they can offer you.

Around 20 million energy customers (mainly with large suppliers) in Britain are on ‘standard variable’ rate tariffs, and are potentially missing out on significant savings. Check the table below to see how ‘standard variable’ rate tariffs compare on average by supplier and against the cheapest available tariffs.

How do ‘standard variable’ rate tariffs compare?

These figures represent a typical dual fuel customer paying by direct debit and with typical consumption. The potential savings figures from the differences we show are indicative. This is because savings for individual customers on standard variable tariffs will vary, and depend on factors like how much energy you use, as well as any eligibility criteria for the cheaper tariffs we’ve compared against. The figures are also only representative of a snapshot at one point in time, and tariffs may change or be withdrawn at short notice.

Table: ‘Standard variable’ rate tariff information

The pricing information refers to 28 November 2016 and should not be used as a price comparison tool. To find out about accredited price comparison sites, see our impartial guide at Be An Energy Shopper.

Supplier (1) Number of customer accounts on standard variable tariffs (2)  Proportion of customer base on standard variable tariffs (%) (3) Average annual cost of  a standard variable tariff (£) (4)

Difference between a supplier’s standard variable tariff and its cheapest tariff (£) (5)

Difference between a standard variable tariff and the average of the cheapest tariffs from the 10 cheapest suppliers (£)    (5) (6) (7) (8)
British Gas 6,639,056 74% 1,044 129 166
Co-operative Energy 96,158 42% 1,121 245 244
EDF Energy 1,943,277 56% 1,069 136 192
E.ON 3,170,499 73% 1,057 41 179
Extra Energy 36,641 14% 1,130 154 252
First Utility 175,208 19% 1,071 157 193
Npower 1,737,642 59% 1,077 180 199
Ovo 225,952 35% 1,064 67 186
ScottishPower 1,541,307 50% 1,081 129 203
SSE 3,864,044 91% 1,068 98 190
Utility Warehouse 503,955 94% 1,012 150 134

Source: Pricing information sourced from Energylinx as at 28 November 2016. All prices include VAT. Customer accounts information based on Ofgem data, received from suppliers for March 2016. All information is based on the most recent complete data Ofgem holds and it will be updated periodically.

How we calculate tariff rates and differences

The table shows the number of domestic customer accounts at March 2016 on standard variable tariffs by supplier (the total of electricity, gas and dual fuel accounts, for all payment methods). It also shows the difference in price between standard variable tariffs and the cheapest tariffs at November 2016, and the cost of an average bill for standard variable tariffs at November 2016. It is based on the most recent complete data we hold.

  1. We have excluded suppliers with fewer than 250,000 customer accounts, as well as suppliers who have more than 90% of their customers on prepayment meters. We discuss prepayment meters further below.
  2. Standard variable tariffs (SVTs) are domestic supply contracts which are for a period of an indefinite length and which do not contain a fixed term period that applies to any of the terms and conditions. SVT rates can be varied at any time, subject to giving customers advance notice where the change increases the charges or is in any other way disadvantageous to the domestic customer. SVTs are the tariffs that customers fall on to when their fixed tariffs end if they have not made any active decision to choose another tariff. 
  3. A dual fuel customer account is counted as one account (rather than two accounts to cover gas and electricity).
  4. All tariffs are for a dual fuel direct debit customer with an average typical domestic consumption value (3100 kWh/year for electricity and 12500 kWh/year for gas). 
  5. Tariffs with limited availability (for example, tariffs which are only available to new customers also called ‘acquisition’ tariffs), or tariffs restricted to certain regions are excluded from the calculation to make sure that all tariffs considered are generally available to all customers across Great Britain. Collective tariffs or exclusive deals only available through a supplier’s website or through a specific price comparison website are included. This is because they are available to all customers. Tariffs restricted to a particular payment method (for instance direct debit, standard credit or prepayment) are also included. The cheapest tariffs can include fixed and variable tariffs, may or may not involve exit fees, rewards or discounts, and may only be available online.
  6. The average of the cheapest tariffs from the 10 cheapest suppliers is £878. To calculate this we took the cheapest tariff offered by each supplier in the market (i.e. one tariff per supplier) and ranked them in order of price. We then took the simple average of the 10 cheapest tariffs. This is to ensure a cross-section of suppliers is included in the calculation. It means the 10 cheapest suppliers are selected from all active suppliers in the market, rather than just those named in the table above.     
  7. The cheapest tariffs can include fixed and variable tariffs, may or may not involve exit fees, rewards or discounts and may be offered by any suppliers active in the market. Some suppliers included in the average of the cheapest tariffs may not offer the Warm Home Discount, which would be a relevant consideration for eligible consumers currently with a supplier that does offer it.
  8. Tariffs available with ‘white label’ providers have been included in the calculation of the average of the cheapest tariffs from the 10 cheapest suppliers (ie the final column). Where relevant, they have also been included as the cheapest tariff offered by the parent supplier of the ‘white label’ (for the calculation in the second to last column). ‘White label’ providers are organisations without supply licenses that partner with an active licensed supplier to offer gas and electricity tariffs using their own brand.

Should I switch?

There are features other than price that you might want to consider before switching tariff or supplier. For example the customer service record of the supplier, exit fees or reward points. Some suppliers also offer ‘standard variable’ rate tariffs which come with other non-energy products and services (also without a fixed length).

Some consumers will have spent longer than others on ‘standard variable’ rate tariffs, and this may vary between suppliers. For instance, some consumers are only on the ‘standard variable’ rate tariff for a limited time while they choose another tariff to switch to, whereas, some consumers (mainly) with the larger suppliers have been on these tariffs for more than 10 years. No matter how long you have spent on a ‘standard variable’ rate tariff, you might be able to save money by switching.

If you have a traditional prepayment meter you may have a more limited choice of tariffs. This is partly a result of the technical limitations of these meters. But you can still ask to change your meter, and from April 2017, prepayment meter customers will be protected by an interim price cap which will save them around £75 a year.  Find out more in guide on Prepayment meters.

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