Your need-to-know guide to Standard Variable Tariffs (SVTs)
Standard Variable Tariffs Explained
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.
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Be cautious about the SVT switch
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.
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CMA’s view on standard variable tariffs
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.
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