Check Your Tariff
To start significantly reducing your energy costs, we first need to ensure that each kWh you consume is at the lowest possible price. Even if you change nothing else about your usage patterns, the cost for what you consume will be less.
One of the first things that needs to be determined is the type of pricing tariff that covers your usage of gas and/or electricity.
The tariff is the supplier’s method of charging you for the energy you consume. The tariff may be broken down into multiple elements, which cover the cost of supplying the energy, plus the supplier’s margin.
You don’t need to understand the intricacies of tariff modelling (that’s what we do on your behalf), but for the sake of conversation….
Elements of a Domestic Energy Tariff
Domestic tariffs are relatively simple, as they need to be applied to large groups of similar customers, rather than negotiated on an individual basis.
Each supplier typically has a limited set of tariffs which they market to households based on their geographic region and an ‘all units’ or ‘day/night’ structure (mirroring the old single rate or dual rate metering systems).
The various components of the energy costs (network costs, levies, line losses, commodity costs) are all bundled into the rates.
Other variations of tariffs may incorporate a ‘matched donation’ to green funds or particular charities. Or may market themselves as green tariffs, if the supplier buys their wholesale power from green sources (wind farms, etc).
Rates may also be fixed or variable. Fixed rates are agreed for the duration of the contract, and won’t change (unless there is an indexation clause in place). Variable rates, as the name suggests – will vary up or down over time at the supplier’s discretion, and in line with their underlying costs.
These are often a pence per day charge, that applies on all days, irrespective of whether you use any energy or not. These might seem quite small, but a £0.50/d charge will add up to £15.00 over a typical month, and £182.50 over a year.
Unit Rates – Single Rate
This is the simplest tariff, as it applies a single price for each unit of energy you consume, at all times during the day, all year round. The price averages out the price between the more expensive peak hours and the cheaper off-peak times.
Gas contracts are always a single rate, as gas is typically traded on a daily volume basis (at least in the UK).
Unit Rates- Dual Rate – Day/Night
The reasons for a household requiring a day/night tariff is not so common today, as these tariffs were originally designed for households that had storage heating in place. These heaters would run during night time, and store heat to be used during the day.
The basis of this type of tariff was to enable these users to run their energy intensive heating on a cheaper night rate, in exchange for paying a slightly higher day rate when they were consuming less.
The night rate was typically 7 hours between midnight and 7am, although there are multiple variations of this for different time blocks. Older consumers may remember these as ‘Economy 7’ or perhaps some of the ‘White Meter’ tariffs?
Multi Rates (Day, Night, Evening & Weekend)
Even less common, but these were tariffs that were mainly for businesses, providing them different unit prices for energy consumed at different times of the day, and on weekdays versus weekends. There are a few households on similar tariffs, but not a common occurrence.
How we can help
Having spent many years within the commodities and utilities industry, we understand energy pricing and all of it’s nuances.
It is too easy to just assume that picking the cheapest price will be the best solution, but we know there are other aspects to consider, in order to truly arrive at the best possible answer.
This includes the timing of a switch, any tie-in clauses, the value-added services offered by a supplier, service level ratings, windows of eligibility for grants and discounts and so on.
By utilising our knowledge and expertise, you can be assured that you are currently paying the right price for the best possible tariff, whilst avoiding the common pitfalls of focussing solely on price, or limitting your search to a single supplier, without comparing against the wider market offerings.