Understanding 2021 Electricity Price Changes
Since April 2021, all of the major energy suppliers have increased their energy prices per kWh for their consumers. All of the ‘big six’ energy suppliers declared price increases this year. All of these energy suppliers enforced an average of £96 annual increase in prices for standard variable and default tariffs. All of these price changes were rolled out and implemented from 1 April 2021.
Who Is Affected The Most By The Electricity Price Changes?
Consumers who are on the “default” or standard variable rate tariffs will be affected first and foremost by these price changes (increases). The anomaly is that consumers on the “default” or standard variable rate tariff plan are already on the most expensive plan the energy provider has to offer. Consumers who are on a fixed energy deal have their prices set for a fixed plan for a fixed duration – i.e. often for 12 to 18 months from the day when they first registered for this plan. Once the initial duration ends, the prices for the plan are revised – i.e. consumers can expect to pay more for the same amount of energy.
What Is The Standard Energy Plan Of An Energy Provider?
The standard energy plan, sometimes also referred to as standard variable rate tariff, indicates the energy supplier’s primary variable-rate plan. The word “standard” may or may not appear in the name when referring to this plan and these are the most expensive rates offered by the energy supplier. New tenants will automatically be placed on the standard plan by their energy supplier when they move into a piece of property after the previous tenants leave. The standard plan is designated as the “standard” or “default tariff” because it is the plan any new consumer will automatically be placed on if they do not otherwise request for a different plan.
There was a difference of approximately £170 between the standard plan and the best deal on the market, in November 2020. Based on current statistics from Ofgem (2019), 53% of UK energy consumers are being charged based on their energy supplier’s default tariff, this number does not include consumers on prepayment meters. Almost half of these consumers have been on the standard plan for more than three years. It is important to note that there are no financial benefits for consumers based on prices or energy usage to remain on this plan and this is why users on this plan do not have to pay any exit fees.
“Variable rate” means that the rates mentioned in the tariff can increase or decrease without prior notice. In most cases, the rates will increase because this is the energy plan that is affected first, as soon as energy prices go up. The rates are already the most expensive on this plan and this is why consumers should be concerned about looking into other plans to switch.
Compare Energy Tariffs With Other Energy Providers
Consumers will begin to realize a world of difference when they begin to compare the rates on their standard plan with the rates of other providers. Consumers on a standard plan do not need to pay any early exit fees if they decide to change their plan at any time.