Energy usage charges, which include the cost of the energy you consume, make up a significant portion of your energy bill. To reduce your overall energy costs, it’s important to understand your tariff and how energy is charged by retailers.
Type of Energy Tariffs
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Variable (Floating) Rate
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What's The Implications of Tariff Types to Homeowners
A Fixed Rate energy tariff allows you to predict your monthly energy bills because the rate remains the same for the duration of the contract.
On the other hand, a Variable Rate tariff means that your monthly energy bill is subject to fluctuations in the market, typically based on wholesale energy prices, making it more difficult to estimate your monthly costs.
Which Energy Tariff is Best?
The most suitable energy tariff depends on your energy usage patterns and personal preference. If you prefer predictability in your energy bills, a fixed rate tariff might be the best option for you.
On the other hand, if you are willing to take the risk of potential price increases in exchange for the possibility of lower energy costs, a variable rate tariff may be a better fit. It’s also important to consider factors such as your values and priorities, such as whether you care about supporting renewable energy sources.
When Should I Fix my Tariff?
Only you can decide whether and whether to fix your energy tariff and now. If global energy prices are particularly high, it might not be the right time to fix your energy tariff. However, if rates are relatively low, it could be a viable option. It’s important to remember, however, that most fixed rates run for a specified period of time.
With variable rate, you run the risk of paying more for your energy if rates rise while you’re on a variable tariff. However, if you are the type that constantly track the market and you don’t mind taking a risk, choosing a variable rate could be an effective way of saving money on your energy bills.
