Standard variable tariffs (SVTs)

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What is a standard variable tariff?

An SVT (sometimes called a standard energy tariff) is an energy supplier’s default tariff.

SVTs are usually the most expensive gas and electricity tariffs, because suppliers can change the unit rate prices at any time alongside wholesale energy prices. But the energy price cap does put a limit on the maximum you can be charged so when fixed tariffs are high, an SVT can be useful. 

You’ll often find yourself on one of these tariffs when a fixed tariff plan ends and you don’t switch to another, or if you’ve never switched suppliers before.

Why do energy prices change on a standard variable tariff?

SVTs do just what their name suggests – they vary the price you pay for energy.

But they don’t go up and down randomly; they reflect what your supplier pays to buy energy in the first place (wholesale energy prices). So if wholesale prices go up or down, your SVT may do the same. Depending on your supplier this may not always happen, and probably not immediately. Suppliers can be slow to pass on falls in wholesale prices to SVT customers.

Even if wholesale energy prices do drop, they usually only account for less than half your energy bill. You’ll still have to pay for the costs of delivering energy, meeting government environmental initiatives, taxes and operating costs. Not to mention your supplier’s profits.

That means even if you’re on an SVT, and you’ve heard energy prices are falling, you may not see a cut in your energy bill.

Should you switch to an SVT?

Usually SVTs are more expensive than fixed deals, but with the current energy crisis this might not be the case. If you do find one you’re keen on, these are the advantages and disadvantages to consider.

Advantages

  • Per unit cost of energy can go up or down
  • Price cap limits the maximum suppliers can charge you
  • Contract is open ended
  • No exit fees – you’re free to switch to a better plan at any time

Disadvantages

  • Might be the most expensive tariff (depending on the energy market)
  • Suppliers tend to charge the maximum amount of the price cap
  • You’re not protected from price rises

What happens when your SVT ends?

You’re not contractually bound to an SVT, so there’s no end date. Your rate simply goes up, down or stays the same according to the market and price increases decided by your supplier.

How can I check if I’m on an SVT?

If you’ve never switched energy suppliers, you’re probably on your supplier’s SVT. This can also happen if your fixed tariff plan has expired, and you haven’t switched to a new plan.

Some suppliers are moving customers onto so-called “temporary tariffs”. These are very similar to SVTs, with the exception that the rate is locked in for a year.

Check your bill or ring your supplier to find out if you’re on an SVT. Different suppliers call their SVTs different names - like 'default' or 'standard' tariffs - so it’s worth double checking.

Key points

  • An SVT is an energy supplier's default tariff and is usually the most expensive one, although this might not be the case in the current market
  • You could be automatically switched to an SVT if you don’t shop around before your existing deal ends
  • There shouldn't be an exit fee from an SVT, so you should be free to switch at any time
  • If you’re on an SVT, your energy price will be capped by Ofgem to protect you from overcharging

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