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Energy tariffs explained
This energy tariffs buyers' guide outlines the different types of energy tariff available.
You buy gas and electricity in kilowatt hours (kWh) – this is what you'll see on
your bill.
Gas tariffs
Gas tariffs are often at two rates. You might pay 4p for the first 5,000 kWh each
quarter, say, and then a lower figure, 2.5p for instance, for each subsequent kWh.
Because suppliers charge different rates, you can lower your gas bills by switching
to the tariff that's best for your own use.
Electricity tariffs
Electricity tariffs work in a similar way, although the pricing is different. You
might pay 24p for the first 125 kWh each quarter, say, and then 10p for each subsequent
kWh.
Because suppliers charge different rates, you can lower your electricity bills by
switching to the best tariff for you.
Types of gas and electricity tariff
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Type of tariff
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How the tariff works
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Dual fuel tariffs
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Dual fuel tariffs work the same way as gas and electricity tariffs. However, suppliers
give discounts for taking both products from them.
For many people, the discounts mean that a dual-fuel tariff – switching both gas
and electricity to the same supplier – works out cheapest.
This isn't always true. But when you compare gas and electricity prices with us,
we take account of all this.
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Green tariffs
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With green tariffs, you still get the same gas and electricity. The tariffs work
in several ways – but many match energy you use against supplies from renewable
sources.
Once you've compared gas and electricity prices with us, you can choose to compare
just green tariffs.
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Online tariffs
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Some of the cheapest tariffs are online only. You don't get a paper bill, but you
manage your account over the internet instead – making payments, giving meter readings
and so on.
The advantage of giving meter readings online is that you know you won't over or
underpay, compared with a company estimate. Plus you don't have to wait around for
the meter reader.
Once you've compared gas and electricity prices with us, you can choose to see just
online tariffs.
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Tariffs with rewards
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As well as cheaper gas and electricity prices, you can also benefit from rewards
with some companies – there's often a reward for signing up and more rewards depending
on your bill.
Types of reward include Argos vouchers, Airmiles and Nectar points.
Once you've compared gas and electricity prices, you can choose to see just tariffs
with rewards.
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Fixed and capped tariffs
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With fixed-rate tariffs, the price is guaranteed not to change for a certain period.
With capped tariffs, it won't go above a certain level.
These accounts help you budget – you know the exact or maximum amount you will pay.
The downside is that these tariffs are a little more expensive than standard ones,
and you won't benefit fully (at all with fixed-price tariffs) from future falls
in energy prices (if there are any).
These tariffs are often for a set period – you'll pay a fee if you want to switch
within the set time.
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Economy 7
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With an Economy 7 meter, you pay less for electricity you use off-peak (between
midnight and 7am), but more during the day. They're commonly used with storage heaters.
If you have one, use timers to run washing machines, dishwashers and so on at night.
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Prepayment meters
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Prepayment tariffs are the most expensive way to pay for gas or electricity.
You pay in advance for what you're going to use, by charging up your key or card
at prepayment outlets.
To change to a cheaper way of paying, such as direct debit, you'll need to have
the meter physically changed. You may have a credit check run on you as well.
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Energy tariffs explained brought to you by LowerMyBills from Experian
The LowerMyBills guide to energy tariffs was created to help you understand the
different energy tariff types for gas and electricity - dual fuel, green, online,
reward, fixed and capped, economy 7, and prepayment meters - giving you the information
you need to choose the right energy tariff for you.
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