Your need-to-know guide to Standard Variable Tariffs (SVTs)
Most energy suppliers will offer a standard variable rate (SVT) tariff as their default option. If you decide not to change tariff or supplier, you will likely be placed on this gas and electricity plan.
It can sometimes be known as an ‘evergreen plan’, this would mean that the price you pay could increase or decrease depending on market fluctuations, and/or changes made by your provider.
If you look for standard variable tariffs (SVTs) online, providers sometimes list the key ‘features’ of these plans to highlight them and make them appear to be an appealing proposition. However, this isn’t always the case, as standard energy tariffs will likely cost you more and be the energy supplier’s most expensive option.
One of the few advantages a standard tariff offers is it’s flexibility. Normally, you would be given the option to switch to another plan without having to pay any administration fees. It’s important to note that if you’re currently on a fixed-rate or a capped-rate tariff and you find a cheaper deal, it is likely that you would have to pay a fee to transfer away from your existing plan.
Many customers end up paying more than they should do on their energy bills because they decide to stay with the same supplier and avoid switching. It’s quick and easy to compare and switch energy suppliers with Utility Saving Expert.
Key Points
Standard variable rate tariffs have few benefits, and many consumers end up on this plan without fully understanding what it is.
Once the introductory period on a fixed-rate, capped-rate or alternative energy tariff reaches the end date, most energy suppliers will automatically transfer you over to an SVT – in most cases, your bills will start to cost a whole lot more.
It’s important to know that providers are not allowed to charge you an exit fee when you are 49 days or less from the end of your current tariff.
If you want to make sure you don’t find yourself on a SVT, carefully read any correspondence you receive from your current energy supplier, they are required to clearly notify you about the expiration date of any introductory deal or offer you have in place. Be ready to complete an energy comparison and switch before you’re moved over to a standard variable tariff.
The terms and conditions for your current deal will help you understand any early exit charges. However, remember that providers are unable to apply any exit fees when you are 49 days or less from the end date of your current tariff.
This is useful to know, as it will give you more than enough time before your current deal expires, and allow you to get a new tariff that is suitable in place. Ultimately, helping you avoid spending time on a costly standard variable tariff.
Sometimes you will come across a headline that advertises a price reduction from an energy supplier. Be cautious when you see this, as it will mostly apply to an average saving a customer would make compared to the provider’s own standard variable-rate tariff.
Here’s a few key points you need to consider when you see these offers. Firstly, most price cuts will be insignificant when compared to savings you would see by switching to another tariff and/or provider. We highly recommend comparing different options, whether they be from the same company, or an alternative supplier as this could help you save hundreds of pounds on your energy bill each year.
If you don’t wish to switch companies, you can still save a lot of money by moving over to the cheapest available tariff from your current provider, and this will usually provide much better value for money compared to their SVT.
Remember to look out for the start date of an energy company’s new price cut. Based on previous history, many of the ‘big 6’ providers will time their price cuts to take effect at the beginning of the Spring season. One reason for this is, that it allows them to charge customers a higher rate during the winter months when most gas and electricity is consumed.
Headline price reductions often appear after political pressure and don’t offer any significant savings as they are generally applied to a standard variable tariff. We believe that suppliers should responsibly deliver low prices that are consistent and competitive, whether a customer opts for a fixed-rate deal or lapses over to a variable-rate deal once the fixed-rate deal expires.
The Competition and Markets Authority (CMA) stated in 2016, that more than 70% of the ‘big six’ energy firm’s domestic customers were on standard variable tariffs, and that the average consumer could potentially save more than £300 by switching to a better deal.
The CMA made provisional decisions on how this market should be reformed and proposed the introduction of an Ofgem-controlled database which highlights disengaged customers who have been on a standard variable-rate tariff for more than three years.
This initiative would then allow competing suppliers to specifically target their marketing efforts at customers who have disengaged, although it’s important to highlight that customers would retain the right to opt-out of this service.
Additionally, the CMA has also helped remove the restriction whereby suppliers are only allowed to have four tariffs, this would help reduce the importance of an SVT.
Want to compare the best tariffs and find out which energy supplier has the cheapest deals? Use Utility Saving Expert’s FREE online comparison tool. See how much you could save on your gas and electricity today.
