If someone has ever told you to “check your energy tariff” and you nodded along while having absolutely no idea what they meant, this guide is for you. The word “tariff” sounds like it belongs in a trade deal or a customs office. It doesn’t help that energy companies use it interchangeably with “plan”, “rate”, and “deal” depending on which page of their website you’ve landed on.
Here’s what’s actually going on. An energy tariff is just the pricing plan your gas or electricity supplier has you on. It determines two things: how much you pay per unit of energy you use (the unit rate), and how much you pay per day just to be connected to the grid (the standing charge). That’s it. Everything else, the confusing names, the jargon, the endless comparison tables, is just detail layered on top of those two numbers.
By the end of this guide, you’ll understand what the different types of energy tariff actually are, how the Ofgem price cap interacts with them, how to compare tariffs properly, and whether switching makes sense for your situation. No fluff, no pressure to sign up to anything specific.
If you need a refresher on what unit rates and standing charges actually look like on a bill, have a read of Understanding Your Energy Bills: A Complete Guide before continuing. It’ll make everything here click faster.
What Is an Energy Tariff, Actually?
Think of it like a mobile phone contract. Your tariff is the deal you’re on. It sets the price per unit of gas (measured in kilowatt hours, or kWh) and the price per unit of electricity (also in kWh), plus a daily standing charge for each fuel.
Every household in the UK is on some kind of tariff, whether they chose it or not. If you’ve never actively picked one, you’re almost certainly on your supplier’s default tariff, which is usually called a standard variable tariff (more on that shortly).
Your tariff doesn’t affect how your energy reaches you. The gas still comes through the same pipes. The electricity still comes through the same wires. What changes is the price you’re charged for using it.
A couple of things that trip people up:
Your tariff is separate from your payment method. Paying by direct debit, prepayment meter, or quarterly bill affects the rates you get, but it’s not the same thing as your tariff. You can be on a fixed tariff and pay by direct debit, or on a variable tariff and pay by prepayment meter. They’re independent.
Your tariff is also separate from your supplier. You can switch tariff without switching supplier, and you can switch supplier without necessarily changing the type of tariff you’re on. Most people mix these up.
Types of Energy Tariff
This is the bit most people’s eyes glaze over, but stick with it. Once you know the main types, everything else about energy pricing makes more sense.
Standard Variable Tariff (SVT)
This is the default. If you’ve never switched, or if your fixed deal has ended and you didn’t do anything, you’re probably on your supplier’s SVT.
The unit rate and standing charge on an SVT can change whenever the Ofgem price cap changes (every three months). Your supplier doesn’t need your permission to adjust the price, they just have to stay within the cap. Most SVTs are priced at or very near the maximum the cap allows, which is why consumer groups tend to describe them as poor value.
SVTs have no exit fees and no contract end date. You can leave one at any time. That flexibility is genuinely useful if you want to switch at short notice.
Who it suits: people who want zero commitment and the ability to switch whenever they like. In practice, most people are on an SVT not because they chose it, but because they forgot to switch or didn’t know they could.
Fixed-Rate Tariff
A fixed tariff locks in your unit rate and standing charge for a set period, usually 12 or 24 months. During that time, your rates don’t change regardless of what happens to wholesale energy prices or the Ofgem cap.
The trade-off is that if prices drop while you’re locked in, you miss out. And if you want to leave early, you’ll typically pay an exit fee (usually £30 to £50 per fuel, though it varies).
Fixed tariffs are not covered by the Ofgem price cap. A supplier can set a fixed tariff above or below the cap level. Sometimes fixed deals are cheaper than the cap, sometimes they’re more expensive. You have to compare the actual numbers.
Who it suits: people who want predictable bills and are happy to commit for a year or two. Particularly useful if you think prices are about to rise and want to lock in before they do.
Variable or Tracker Tariff
A variable tariff (sometimes called a tracker tariff) has a unit rate that moves in line with wholesale energy prices or the Ofgem cap. Unlike an SVT, a tracker is something you actively choose, and the pricing formula is usually more transparent.
Octopus Energy’s Tracker tariff is a well-known example. It adjusts daily based on wholesale gas and electricity costs, with the exact formula published openly. When wholesale prices fall, your bill falls. When they spike, so does your bill.
Variable tariffs usually have no exit fees, which means you can switch away if things get uncomfortable. But you do need a tolerance for uncertainty.
Who it suits: people who are comfortable with fluctuating bills and believe that wholesale prices will trend downward over their time on the tariff. Not ideal if you need to budget to the penny each month.
Time-of-Use Tariffs
These tariffs charge different rates depending on when you use energy. The idea is straightforward: electricity is cheaper to produce at certain times (overnight, or when wind generation is high), so the tariff passes that on.
Economy 7 is the oldest and most common time-of-use tariff. You get a cheaper rate for seven hours overnight (usually roughly midnight to 7am) and a higher rate during the day. It was designed for homes with storage heaters or immersion water tanks that heat up overnight. If you don’t have storage heating, Economy 7 can actually cost you more because the daytime rate is higher than a standard flat rate.
Economy 10 works similarly but gives you ten hours of cheaper electricity, sometimes split across overnight and afternoon periods.
Smart tariffs take this further. Octopus Energy’s Agile tariff, for instance, changes price every 30 minutes based on wholesale market conditions. When demand is low or renewable generation is high, prices can drop dramatically. Occasionally they go negative, meaning the supplier pays you to use electricity. When demand peaks (typically 4pm to 7pm), prices spike. Agile requires a compatible smart meter and suits households that can genuinely shift their usage, especially those with battery storage or EV chargers.
Who it suits: Economy 7/10 suits homes with storage heaters. Smart time-of-use tariffs suit tech-savvy households who can shift usage patterns and have smart meters installed. If you can’t realistically avoid using energy during peak hours, these can end up costing more.
Green and Renewable Energy Tariffs
A green tariff means your supplier matches some or all of the electricity you use with renewable energy certificates (called REGOs in the UK). This doesn’t mean the actual electrons reaching your home are green. It means your supplier has purchased enough certificates to cover your usage from renewable sources.
Some green tariffs cost a small premium. Others don’t cost any more than the supplier’s standard tariff. The quality varies quite a bit. A tariff backed by REGOs alone is less meaningful than one where the supplier actually invests in new renewable generation.
Who it suits: anyone who wants their energy spend to support renewable electricity. Just check whether the tariff involves genuine investment in renewables or just certificate matching. Ofgem has been tightening the rules on what suppliers can claim as “green”, but it’s still worth reading the fine print.
Dual Fuel vs Single Fuel Tariffs
Dual fuel simply means getting both gas and electricity from the same supplier. Most suppliers offer a small discount for taking both fuels, though the discount has shrunk over the years and sometimes isn’t there at all.
Single fuel means getting gas from one supplier and electricity from another. This used to be more common when the savings from shopping around were larger. These days, the admin of managing two suppliers often isn’t worth the marginal saving, but it depends on the deals available.
Who it suits: dual fuel is simpler and occasionally cheaper. Single fuel only makes sense if one supplier has a significantly better rate on one fuel but not the other, and you’re willing to deal with two accounts.
Prepayment Tariffs
If you have a prepayment meter, you pay for energy before you use it by topping up a key, card, or smart meter balance. Prepayment tariffs have historically been more expensive than direct debit tariffs, though the gap has narrowed thanks to regulatory pressure from Ofgem.
Prepayment tariffs are covered by their own version of the Ofgem price cap, which for April to June 2026 is set at £1,597 per year for typical use. That’s actually lower than the direct debit cap (£1,641), partly because of a levelling adjustment Ofgem introduced.
You don’t always get a choice about having a prepayment meter. Some are installed by suppliers when customers fall into debt. If you’ve had a smart meter fitted, it can be switched between prepayment and credit mode remotely, which gives more flexibility.
Who it suits: people who prefer to pay as they go, or those who’ve been placed on a prepayment meter by their supplier. If you’re on prepayment by choice and have a smart meter, check whether switching to direct debit and a credit tariff would save you money.
Tariff Comparison at a Glance
| Tariff Type | How Pricing Works | Price Cap Protected? | Typical Contract Length | Exit Fees? | Best Suited For |
|---|---|---|---|---|---|
| Standard Variable (SVT) | Unit rate adjusts with Ofgem cap every quarter | Yes | Rolling (no fixed term) | No | Those wanting flexibility to switch anytime |
| Fixed Rate | Unit rate locked for contract duration | No | 12–24 months | Usually (£30–£50 per fuel) | Those who want bill certainty |
| Variable / Tracker | Unit rate follows wholesale prices or a published formula | Depends on tariff | Rolling or 12 months | Usually no | Those comfortable with price fluctuation |
| Economy 7 / Economy 10 | Cheaper overnight rate, higher daytime rate | Yes (if on SVT version) | Varies | Varies | Homes with storage heaters |
| Smart Time-of-Use (e.g. Agile) | Rate changes every 30 minutes based on wholesale market | No | Rolling | No | Tech-savvy households with smart meters and flexible usage |
| Green / Renewable | Standard pricing with renewable certificate matching | Depends on underlying tariff type | Varies | Varies | Environmentally motivated bill payers |
| Dual Fuel | Both fuels from one supplier, sometimes with a discount | Depends on underlying tariff type | Varies | Varies | Those who want simplicity and one bill |
| Prepayment | Pay before you use, rates set under separate cap | Yes (separate cap) | Rolling | No | Pay-as-you-go households |
The Price Cap and Tariffs
The Ofgem energy price cap is probably the most misunderstood thing in UK energy. Most people think it caps their total bill. It doesn’t.
What it actually caps is the maximum unit rate and standing charge that suppliers can charge on their default (standard variable) tariffs. So if you use more energy than average, your bill can be well above the headline cap figure. If you use less, it can be well below.
For April to June 2026, the cap is set at £1,641 per year for a typical household using both gas and electricity and paying by direct debit. Here’s what that breaks down to in practice:
Current Ofgem Price Cap Rates (April–June 2026, Direct Debit)
| Unit Rate (p/kWh) | Standing Charge (p/day) | |
|---|---|---|
| Electricity | 24.67p | 57.21p |
| Gas | 5.74p | 29.10p |
Based on national averages across England, Scotland and Wales, including VAT at 5%. Rates vary slightly by region.
These figures assume typical annual consumption of 2,700 kWh of electricity and 11,500 kWh of gas.
A few things to be clear about:
The cap only applies to SVTs and default tariffs. If you’re on a fixed tariff, you’re paying whatever rate you agreed to when you signed up, regardless of the cap. If you’re on Agile Octopus or another smart tariff, the cap doesn’t apply either.
The cap changes every three months. It’s reviewed in January, April, July, and October. When wholesale prices go up, the cap can increase. When they fall, it can decrease. The April 2026 cap dropped by about 7% compared to the previous quarter, partly due to the government removing certain green levies (the ECO and Renewables Obligation) from customer bills and funding them through general taxation instead.
Standing charges are capped too. People often focus on unit rates, but the standing charge is part of the cap. You pay it every day whether you use any energy or not. For a typical dual fuel household, that’s roughly 86p per day (about £315 per year) before you’ve used a single unit of gas or electricity.
Prepayment meters have their own cap. For April to June 2026, the prepayment cap is £1,597 per year on typical use, which is lower than the direct debit cap.
How to Compare Tariffs Properly
Comparing tariffs sounds simple, but there are a few traps that catch people out.
What to Actually Look At
Estimated annual cost is the most useful single number. It’s calculated using your actual (or estimated) usage and the tariff’s unit rates and standing charges. Most comparison tools will calculate this for you if you give them your usage figures or let them pull data from your smart meter. Be cautious with comparison sites that use “typical” usage as a default, because your usage might be nothing like typical.
Unit rates matter most for high-usage households. The lower the rate per kWh, the less you pay for each unit you use.
Standing charges matter most for low-usage households. If you don’t use much gas or electricity (perhaps you live alone in a flat), a high standing charge can dominate your bill even if the unit rate is cheap.
Contract length and exit fees determine your flexibility. A 12-month fix with a £50-per-fuel exit fee is a real commitment if prices drop three months in.
Common Comparison Traps
Introductory rates that revert to something expensive after a few months. Always check what happens when the introductory period ends.
Green claims that don’t mean much. A tariff “backed by 100% renewable energy” might just mean the supplier buys REGO certificates. That’s the minimum standard. Look for suppliers that invest in actual renewable generation.
Headline figures based on “typical” usage. If you live in a draughty Victorian terrace with four kids, your usage is not typical. And if you live alone in a modern one-bed flat, your usage is also not typical. Use your own numbers.
Worked Example: Two Tariffs, Same Household
Here’s how two tariffs with different structures can produce different annual costs for exactly the same household usage. Let’s say a household uses 2,700 kWh of electricity and 11,500 kWh of gas per year.
| Tariff A (Lower Unit Rate, Higher Standing Charge) | Tariff B (Higher Unit Rate, Lower Standing Charge) | |
|---|---|---|
| Electricity unit rate | 23.50p/kWh | 25.00p/kWh |
| Gas unit rate | 5.50p/kWh | 5.80p/kWh |
| Electricity standing charge | 60.00p/day | 48.00p/day |
| Gas standing charge | 32.00p/day | 26.00p/day |
| Annual electricity cost | £634.50 + £219.00 = £853.50 | £675.00 + £175.20 = £850.20 |
| Annual gas cost | £632.50 + £116.80 = £749.30 | £667.00 + £94.90 = £761.90 |
| Total annual cost | £1,602.80 | £1,612.10 |
The difference here is about £9 per year. Marginal. But if this household used significantly less energy (say, half the typical amount), Tariff B would come out noticeably cheaper because its lower standing charges would make a bigger difference. If they used more energy, Tariff A’s lower unit rates would win more convincingly.
The point: you can’t just look at unit rates or just look at standing charges. You need both, applied to your actual usage.
If you want to figure out what a tariff would cost you each month on direct debit, the Direct Debit Calculator can help you estimate based on your usage.
Switching Tariffs: What Actually Happens
“Switching” can mean two different things, and it’s worth separating them.
Switching tariff with your current supplier is usually the simplest version. You pick a different tariff from your existing supplier (for instance, moving from their SVT to a fixed deal). This is often instant or takes a day or two. Your account stays the same, your payments continue, and there’s no disruption.
Switching to a new supplier is a bigger move, but it’s still straightforward. Since Ofgem’s Faster Switching Programme was introduced, most supplier switches complete within three to five working days. Your gas and electricity supply is not interrupted at any point. Nothing is physically disconnected. It’s a back-office handover.
Here’s what happens step by step:
You choose a new tariff (either with your current supplier or a new one). If it’s a new supplier, you’ll usually do this through their website or a comparison site. You’ll have a 14-day cooling-off period during which you can cancel without penalty. After that, the switch goes through. Your old supplier sends a final bill. If your account was in credit, they refund you. If you owe them money, you settle up. Your new supplier starts billing you.
Common Fears (Mostly Unfounded)
“Will my gas or electricity get cut off?” No. Your supply continues uninterrupted. The switch happens behind the scenes.
“Will I lose my meter readings?” No. You should take meter readings on the day of the switch (or close to it) so both suppliers can bill accurately. If you have a smart meter, readings transfer automatically.
“What if I’m in debt to my current supplier?” It depends. If the debt is less than 28 days old, your supplier generally can’t block the switch. If it’s older, they can object until you either pay it off or agree a repayment plan. For prepayment customers, there’s a Debt Assignment Protocol that allows switching with debts up to £500 per fuel, with the new supplier taking on the debt.
“Do I need a smart meter?” Not for a basic switch between standard tariffs. You only need a smart meter for certain time-of-use tariffs like Agile or Intelligent Octopus.
If your bills seem high but you’re not sure a tariff switch is the answer, it might be worth checking whether the problem is your usage rather than your tariff. Why Are My Energy Bills So High? covers the most common reasons bills creep up.
When Switching Doesn’t Make Sense
Not every situation calls for a switch, and being honest about that is important.
You’re already on a competitive fixed deal. If you locked in a fixed tariff when prices were lower and it still has months left to run, staying put is often the smartest move. The exit fee plus the higher rate on a new deal could leave you worse off.
The savings are too small to bother. If the difference between your current tariff and the best available is £20 or £30 a year, the hassle of switching (even though it’s minimal) might not feel worth it to you. That’s a valid choice.
You’re nearing the end of a fixed deal. If your fix ends in the next few weeks, many suppliers let you switch without exit fees once you’re within the last 49 days of your contract. Wait it out and then compare deals at that point.
You’re on a specialist tariff that suits your setup. If you have solar panels, battery storage, an EV, or storage heaters, you might be on a tariff specifically designed for your equipment. Switching to a generic deal could cost you more than it saves.
Wholesale prices are volatile and you’re risk-averse. When wholesale markets are turbulent (as they have been at various points since 2022), locking into a fixed deal gives you certainty. If you’re on an SVT and prices are currently low, you might prefer to ride the cap downwards rather than fixing at a rate that could end up being higher than future cap levels.
None of this means you shouldn’t compare. Just that comparing and then deciding to stay is a perfectly reasonable outcome.
Trade-Offs and Limitations
This guide covers the tariffs available to most UK households on the standard gas and electricity grid. It doesn’t cover:
Business energy tariffs, which have entirely different pricing structures, contract terms, and regulations.
District heating schemes, where heat is supplied from a centralised source and you don’t have a traditional gas supply.
Export tariffs for solar panels or battery storage, such as the Smart Export Guarantee (SEG) or Octopus Outgoing. These are paid to you for electricity you send back to the grid, and they work differently from import tariffs.
Specialist tariffs for electric heating systems like heat pumps, which some suppliers offer with lower electricity rates to offset the loss of gas.
If any of these apply to you, you’ll need more specific guidance than a general tariff explainer can offer. Citizens Advice and the Energy Saving Trust both have detailed resources on these topics.
Frequently Asked Questions
What tariff am I on right now?
Check your latest energy bill or log into your supplier’s online account or app. Your tariff name should be listed clearly, along with your current unit rates and standing charges. If you can’t find it, call your supplier and ask.
Can I switch if I’m in debt to my supplier?
Often, yes. Debts less than 28 days old generally can’t block a switch. Older debts might, but you can usually resolve this by agreeing a repayment plan. Prepayment meter customers can switch with debts up to £500 per fuel under the Debt Assignment Protocol.
Is a fixed tariff always cheaper?
No. Fixed tariffs can be priced above or below the current Ofgem cap level. Whether a fix saves you money depends entirely on what happens to wholesale prices during the contract. If prices fall, your fixed deal could end up being more expensive than staying on a capped SVT.
Do I need a smart meter to get a time-of-use tariff?
For Economy 7 and Economy 10, no, these work with older multi-register meters that have been around for decades. For newer smart tariffs like Agile Octopus, yes, you need a compatible smart meter (usually SMETS2 or an upgraded SMETS1) because the tariff needs half-hourly readings.
What happens to the price cap if I’m on a fixed tariff?
Nothing. The cap only applies to standard variable and default tariffs. If you’re on a fix, your rates stay as agreed until your contract ends, regardless of what the cap does.
Where Does This Leave You?
If you’ve read this far, you now know more about energy tariffs than most people. Here’s a quick summary based on common situations:
If you’re on an SVT and have never switched: you’re almost certainly paying more than you need to. Compare tariffs. Even switching to your own supplier’s best deal could save you money.
If you’re on a fixed deal with months left: check the rates. If they’re competitive with or below the current cap, sit tight. Set a reminder to compare again before it ends.
If you’re a renter: you can switch supplier without your landlord’s permission in most cases (as long as you’re the named bill payer). Don’t assume you’re stuck.
If you’re on a prepayment meter: check whether a smart meter would open up cheaper tariff options. Many suppliers will install one for free.
If tariff flexibility matters to you, suppliers like Octopus Energy tend to offer more varied tariff options than most, from tracker tariffs to half-hourly smart pricing. But the best tariff for you depends on your usage, your home, and how much price uncertainty you can tolerate.
For a broader look at reducing your energy costs beyond just tariff choice, including insulation, usage habits, and payment strategies, have a read of our master guide on How to Actually Slash Your Energy Bills.
