Standard variable rate tariffs, SVTs or flexible tariffs?
Sometimes referred to as a flexible tariff by an energy supplier, an SVT or standard variable rate tariff means the rate you pay for your energy can go up or down.
What is a standard variable rate tariff?
A standard variable rate tariff is an energy provider’s basic, variable-rate plan. These tariffs don’t always have ‘standard’ in the name and some providers choose to label them as flexible tariffs.
A standard variable rate tariff is typically an energy provider most expensive tariff. When compared to the cheapest tariff available in November 2020, customers could have saved £170 a year by switching away from a standard variable rate tariff.
How do standard variable rate tariffs work?
Like all energy tariffs, you’re charged per unit of fuel used, a standing daily charge which covers the energy suppliers cost to supply as well as 5% VAT.
However, unlike fixed-rate tariffs, if you’re energy tariff is variable or flexible, your unit rates can fluctuate - meaning they can go up or down. More often than not, you’ll see the unit price go up.
Standard variable rate tariffs are the first to be affected when suppliers announce a price change or Ofgem announce changes to the energy price cap. As an SVT is typically more expensive, it’s important to know you can make savings by switching, you can see how much you could save by comparing through our free to use comparison service.
How do you know if you’re on a standard variable rate tariff?
If you’ve never switched your energy, it’s most likely that you are on a standard variable rate tariff. This is because they are usually also energy providers default tariff. Meaning, if you move home and inherit a supplier, or if your fixed rate tariff comes to an end and you haven’t switched, you’ll automatically be placed on the supplier’s standard tariff when they take you on.
Currently, it’s estimated that 11 million UK households are on their energy suppliers default tariff, meaning they’re most likely on a standard variable rate tariff.