What is a standard variable tariff?
An SVT is an energy supplier’s default tariff. If you’ve never switched it’s likely you’re on one – those on fixed energy deals are usually automatically rolled on to this type of tariff once their fix ends, though British Gas customers are now moved onto its Temporary Tariff instead.
The cost of an SVT is, as the name suggests, variable. So the rate you pay can go up or down depending on wholesale energy costs – what suppliers pay for gas and electricity – and there are no exit fees or fixed end date.
Conversely, a fixed-price tariff essentially means the unit price you agree to pay for your energy is set for a certain period, such as one or two years, meaning it won’t increase for the duration of the fix. However, this tariff type may have exit fees if you decide to switch before it ends.
How can I beat the hike?
Here’s what the hike looks like for someone who uses a typical amount of energy:
- If you’re on the SVT, the average increase will be £44/yr to £1,205/yr – up 3.8%.
- If you’re on a fix, your bill won’t change until your fix is up. Once it is, you’ll be automatically moved on to the firm’s Temporary Tariff – fixed for a year – which is also going up £44/yr today to an average £1,180/yr.
There are no exit fees with British Gas’s standard tariff or its Temporary Tariff, so you can ditch and switch penalty-free at any point. And if you’re on either tariff you’re likely already overpaying by £100s/yr, so act now to save.
If you’re on British Gas’s standard tariff, switching to the cheapest deal on the market at £921/yr could save you over £230/yr, based on typical use.
We launched our Big Switch Event 11 a couple of weeks ago, with two cheap two-winter fixes. One has already gone, and the other is likely to end soon, so use our free Cheap Energy Club to do a full market comparison to find the best deal for you.
Isn’t there an energy price cap coming?
It’s expected that regulator Ofgem will enforce a price cap – an upper limit energy suppliers can charge customers on standard tariffs – by the end of the year. It’s been set provisionally at £1,136/yr based on average use, though that amount is yet to be confirmed.
Once the cap is introduced, all suppliers will not be able to set standard variable or default tariffs above this level, for a typical user.
Based on the current proposed limit, this would still only save British Gas customers an average £69/yr, so you’re far better off switching and saving now. That’s why we’ve factored the capped price into the savings we quote above, to make it as fair a comparison as possible.