In February 2020 we published the updated Default Tariff Cap level for the six months from 1 April 2020 to 30 September 2020. From 1 April 2020, the level of the cap will fall to £1,162, a fall of £17. This will be reflected in future updates.
As of January 2019, the average price of SVTs for the six largest suppliers for a typical dual fuel customer paying with direct debit was £1,178, unchanged from the previous month. The current default tariff cap for this winter period is set at £1,179.
The cheapest tariff in the market decreased by £15 from £829 in December 2019 to £814 in January 2020. The cheapest tariff basket decreased by £31.82, from £872.34 in December 2019 to £840.52 in January 2020. See the methodology for information on how the cheapest tariff basket is calculated.
As a result, the differential between the average price of SVTs for the six largest suppliers and the market cheapest tariff was £364, an increase of £15 compared to the previous month. The differential between the average price of SVTs for the six largest suppliers and the cheapest tariff basket also slightly increased, from £305 in December 2019 to £337 in January 2020.
In January 2020, OVO completed the purchase of SSE, while keeping SSE as a separate brand, with different tariff offers. From January, OVO’s SVTs are included in the calculation of the average price of SVTs for the six largest suppliers.
Relevance and further information
Tariff differentials reflect pricing in different market segments, as well as how much other suppliers are able to compete on price with the six large suppliers.
We calculate the bill values associated with the different tariff types using a ‘typical medium domestic consumer’. As of October 2017, typical domestic consumption values (TDCV) for a medium consumer are 12,000kWh/year for gas and 3,100kWh/year for electricity (profile class 1). The chart includes collective switching tariffs from Q1 2016. All tariffs shown in the chart are for a dual fuel, direct debit customer. Dual fuel refers to a situation where a customer takes gas and electricity from the same supplier.
A standard variable tariff refers to a supply contract which is for a period of an indefinite length and which does not contain a fixed term period that applies to any of the terms and conditions. It’s an energy supplier’s basic offer. If a customer does not choose a specific energy plan, for example after their fixed tariff ends, they will be moved on a standard variable tariff until they have chosen a new one. A customer can also make an active choice to select a standard variable tariff.
Tariffs with limited availability depending on customer features (for example, tariffs which are only available to new customers, also known as ‘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 GB.
Tariffs available with white label suppliers are included in the calculation of the cheapest tariffs. White label suppliers are organisations without supply licences that partner with an active licensed supplier to offer gas and electricity using their own brand.
To calculate the average of the cheapest tariffs from the 10 cheapest suppliers we took the cheapest tariff offered by each supplier in the market (i.e. one tariff per supplier) and then ranked the tariffs in order of price. We then took the simple average of the 10 cheapest tariffs in this list. This method is to ensure a cross section of suppliers is included in the calculation.