How energy tariffs actually work

Your energy tariff is just the set of prices you pay: a unit rate (per kWh of electricity or gas you use) and a standing charge (a fixed daily fee). Unit rates for most homes are limited by the Ofgem price cap, which is why the biggest differences between tariffs are fixed deals versus the cap, and the standing charge. But not every tariff is a single flat rate — and that's where a naive comparison goes wrong.

The price cap

Ofgem sets a cap on the unit rates and standing charges suppliers can charge on a standard variable tariff. It's reviewed every quarter, so it moves up and down. The cap is a reference point, not a target you're stuck with — a fixed deal can sit below it, and specialised tariffs price differently again.

Fixed and standard variable

A fixed tariff locks your unit rate and standing charge for a set period, so you know what you'll pay per unit until the end date (there may be an exit fee if you leave early). A standard variable tariff is the default: capped, but the rate can move each quarter with the cap. These two are the ones a simple 'your rate versus a cheaper rate' comparison can fairly reflect.

Time-of-use tariffs (EV and Agile)

Some tariffs charge different prices at different times. An EV or off-peak tariff gives you a cheap overnight rate — great for charging a car or running a heat pump while you sleep — in exchange for a higher rate during the day. A dynamic or 'Agile' tariff goes further and changes the price every half-hour, tracking wholesale costs. For these, a single 'cheaper rate' comparison is meaningless: the cheap rate isn't your all-day rate, and what matters is when you use power.

Economy 7 and 10

Economy 7 (and Economy 10) tariffs split the day into a cheaper night rate and a higher day rate — seven or ten cheaper hours overnight. They suit homes with storage heaters or that can shift a lot of use into the night. Because there are two rates, not one, comparing on a single unit rate would misrepresent what you actually pay.

Solar and export tariffs

If you have solar panels, you both draw electricity from the grid and send some back. An export tariff (like the Smart Export Guarantee) pays you for what you send back. Add a battery and the balance shifts again. A solar home is genuinely specialised — its real cost depends on how much you generate, use directly and export, so a plain unit-rate comparison can't capture it.

Prepayment meters

A prepayment tariff means you pay in advance — topping up a key, card or smart meter. It has its own capped rates and suits plenty of households. If money is ever tight, suppliers can add emergency credit and there's free, confidential help available; you never have to go without. Prepayment works differently enough that it isn't reduced to a single comparison figure either.

The honest takeaway: for a fixed or standard variable tariff, comparing your rate against the cap and the best fixed deals is fair and useful. For EV, Agile, Economy 7, solar or prepayment, a single 'you could save £X' figure would be misleading — so a good tool tells you where you stand qualitatively and points you to a specialist, rather than inventing a number. This is general information, not advice.